Shri Udit Agarwal, Kolkata V. DCIT(IT)-2(1), Kolkata, Kolkata

ITA 1839/KOL/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8901 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Keywords: Unexplained cash credit; Depreciation; Principle of natural justice; Earning of tax free income; Question of law; Accommodation entries; Onus to prove; Penny stocks
• Section: 69C; 143(3); 133A; 133(6); 143(1); 131; 68

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI, M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 1839 / KOL / 20 17 ASSESSMENT YEAR :2014-15 SHRI UDIT AGARWAL 3, MADAN MOHAN BURMAN STREET, KOLKATAA-007 [ PAN NO.AHUPA 0424 B ] V/S . DCIT (IT)-2(1), 110, SHANTI PALLY, KOLKATA- 107 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SUBASH AGARWAL, ADVOCATE /BY RESPONDENT SHRI ROBIN CHOUDHURY, ADDL. CIT-DR /DATE OF HEARING 03-12-2018 /DATE OF PRONOUNCEMENT 26-12-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-22,KOLKATAS O RDER DATED 10.05.2017 PASSED IN CASE NO.71/CIT(A)/22/KOL/14-15/16-17 INVO LVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. HEARD BOTH THE LEARNED REPRESENTATIVES. CASE FILE P ERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GROUND CHALLENGE S CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION TREATING ITS LONG TER M CAPITAL GAINS (LTCG) OF 64,99,391/- TO BE UNEXPLAINED CASH CREDITS U/S 68 O F THE ACT. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER:- 06. DECISION: 1. I HAVE CAREFULLY CONSIDERED THE ACTION OF THE LD . AO IN TREATING THE AMOUNT OF RS.67,24,391/- BEING CLAIMED BY THE APPELLANT TO BE PROCEEDS OF SHARES SOLD TO BE LTCG AND CLAIMED AS EXEMPT. THE FINDINGS OF THE LD. AO ARE BASED ON THE INFORMATION BEING SUPPLIED BY THE INVESTIGATION WIN G OF THE DEPARTMENT AT KOLKATA. I HAVE ALSO CAREFULLY EXAMINED THE SUBMISS IONS OF THE APPELLANT, WHEREIN ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 2 HE HAS CITED SEVERAL CASES WHEREIN THE CLAIM HAS BE EN MADE THAT THE DECISIONS ARE IN HIS FAVOUR. I HAVE ALSO CAREFULLY EXAMINED T HE SUBMISSIONS FILED BY THE APPELLANT ASSESSEE BEFORE THE LD. AO DURING THE COU RSE OF THE SCRUTINY ASSESSMENT. ON PERUSAL O THE SUB MISSION FILED BY T HE ASSESSEE, REPORT RECEIVED FROM DGIT(INV.),KOLKATA AND AVAILABLE RECORDS, THE FOLLOWING NOTEWORTHY FEATURES OF THE TRANSACTIONS HAVE SURFACED AS DISCLOSED HERE UNDER: TUNL TEXTILE MILLS STAND ALONE BALANCE SHEET . IN RS CR. EQUITIES AND LIABILITIES SHAREHOLDERS FUND MAR 15 MAR 14 MAR 13 MAR 12 MAR 11 EQUITIES SHARE CAPITAL 13.18 13.18 13.18 13.18 13.18 TOTAL SHARE CAPITAL 13.18 13.18 13.18 13.18 13.18 RESERVES AND SURPLUS -0.85 -0.92 -1.17 -1.17 -1.47 TOTAL RESERVE AND SURPLUS -0.85 -0.92 -1.17 -1.27 - 1.47 TOTAL SHAREHOLDERS FUNDS 12.33 12.36 12.01 11.91 11 .71 NON CURRENT LIABILITIES LONG TERM BORROWINGS 0.45 0.59 0.97 0.58 1.59 LONG TERM PROVISIONS 0.14 0.09 0.06 0.04 0.03 TOTAL NON CURRENT LIABILITIES 0.59 0.68 1.02 1.63 1 .62 CURRENT LIABILITIES SHORT TERM BORROWINGS 4.02 3.93 3.87 3.11 2.49 TRADE PAYABLES 2.64 4.71 6.33 3.72 4.78 OTHER CURRENT LIABILITIES 0.50 1.03 0.90 1.06 1.16 SHORT TERM PROVISION 0.06 0.09 0.11 0.10 0.13 TOTAL CAPITAL & LIABILITIES 20.14 22.71 24.25 21.52 21.89 ASSETS NON CURRENT ASSETS TANGIBLE ASSETS 3.68 4.25 4.80 5.16 4.19 CAPITAL WORK IN PROGRESS 0.00 0.26 0.12 0.00 0.00 FIXED ASSETS 3.68 5.51 4.92 5.``6 4.19 NON CURRENT INVESTMENTS 0.11 0.11 0.10 0.10 0.10 DEFERRED TAX ASSETS (NET) 0.72 0.71 0.67 0.75 0.84 LONG TERM LOAN & ADVANCES 0.07 0.07 2.03 3.90 4.87 OTHER NON-CURRENT ASSETS 0.40 0.40 0.35 0.29 0.23 TOTAL NON CURRENT ASSETS 4.99 5.79 8.87 10.19 10.23 CURRENT ASSETS INVENTORIES 9.41 110.39 9.07 6.98 6.00 TRADE RECEIVABLES 4.91 5.66 6.12 3.87 5.26 CASH AND CASH EQUIVALENTS 0.14 0.16 0.10 0.07 0.06 SHORT TERM LOAN & ADVANCES 0.66 0.68 0.86 0.33 0.28 OTHER CURRENT ASSETS 0.03 0.03 0.03 0.08 0.06 TOTAL CURRENT ASSETS 153.15 16.92 16.18 11.33 11.66 TOTAL ASSETS 20.14 `22.71 24.25 21.52 21.89 TUNI TEXTILE MILLS PREVIOUS YEAR STANDALONE PROFIT & LOSS ACCOUNT ..IN RS. CR. MQAR15 MAR14 MAR13 MAR12 MAR11 INCOME SALES TURNOVER 29.76 24.52 19.32 22.01 18.30 NET SALES 29.76 24.52 19.32 22.01 18.30 OTHER INCOME 0.20 0.22 0.07 0.07 0.12 STOCK ADJUSTMENTS -1.35 1.05 1.17 0.71 0.08 TOTAL INCOME 28.61 25.79 20.76 22.79 19.50 EXPENDITURE RAW MATERIALS 23.75 20.57 16.03 18.82 16.39 POWER & FUEL COST 0.50 0.89 0.68 0.51 0.33 EMPLOYEE COST 1.27 1.34 0.91 0.83 0.78 OTHER MANUFACTURING EXPENSES 0.74 1.15 0.81 0.5 2 0.37 MISCELLANEOUS EXPENSES 0.57 0.12 0.71 0.50 0.5 1 TOTAL EXPENSES 26.83 24.07 19.14 21.18 18.38 OPERATING PROFIT 1.58 1.50 1.35 1.54 1.00 ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 3 PBDT 1.78 1.72 1.62 1.61 1.12 INTEREST 0.93 0.96 0.91 0.84 PBDT 0.85 0.76 0.71 0.77 0.50 DEPRECIATION 0.82 0.54 0.54 0.48 0.62 PROFIT BEFORE TAX 0.03 0.22 0.17 0.29 PBT(POST EXTRA-ODD ITEMS) 0.33 0.22 0.17 0.29 0.3 0 TAX -0.02 -0.03 0.08 0.09 0.32 REPORTED NET PROFIT 0.05 0.25 0.10 0.20 0.32 TOTAL VALUE ADDITION 3.08 3.50 3.11 2.35 0.10 0.10 0.23 1.99 PER SHARE DATA (ANNUALIZED) SHARES IN ISSUE (LAKHS) 1,306.3 1,306.31 1,306.31 1, 306.31 1320.63 EARNING PER SHARE (RS) 0.00 0.02 0.01 0.02 0.18 BOOK VALUE (RS) 0.94 0.94 0.92 0.91 8.96 D. IT IS ALSO NOTEWORTHY THAT THE OPERATING PROFIT AND REPORTED NET PROFIT WERE INFINITESIMALLY SMALL ALL THROUGH THE PERIOD. THE E PS OF THE COMPANY (WHICH REFLECTS THE FINANCIAL HEALTH OF A COMPANY) WAS ABS OLUTELY NEGLIGIBLE THROUGHOUT THE PERIOD. E. DURING THE PERIOD, NO MATERIAL CORPORATE ANNOUNC EMENT WAS MADE BY TUNI TEXTILE WHICH COULD SUPPSORT SUCH PRICE RISE IN ITS SCRIP. THUS, THE SHARP RISE IN THE PRICE OF THE SCRIP OF TUNI TEXTILE DURING THE PERIO D WAS NOT SUPPORTED BY ITS FUNDAMENTALS OR ANY OTHER GENUINE FACTOR. STRANGELY , IN SPITE OF SUCH TRIFLING FUNDAMENTALS THE SHARE PRICE ROSE TO ABNORMALLY HIG H LEVEL. INVESTMENT IN A COMPANY HAVING SUCH POOR AND MEAGER FUNDAMENTALS CA NNOT PRIMA FACIE BE TERMED AS A RATIONAL INVESTMENT BEHAVIOR. SINCE PER IOD TO THE TRADING IN ITS SCRIP DURING THE EXAMINATION PERIOD, FINANCIAL STANDING I N THE SECURITIES MARKET AND THE ONLY WAY IT COULD HAVE INCREASED ITS SHARE VALUE IS BY WAY IN MARKET MANIPULATION. SIMILAR UPSWING OF PRICES OF SHARES HAVE BEEN OBSER VED IN CASE OF SOME OTHER COMPANIES, WHOSE FUNDAMENTALS ARE NOT JUSTIFYING TH E NORTHERN MOVEMENT OF THE STOCKS. THE SEBI HAS SUSPENDED TRADING IN 26 SCRIPS OF SUCH PENNY STOCKS . F. ON INVESTIGATION AND ANALYSIS OF THE TREND, IT I S DEDUCTED BY THE SEBI THAT CIRCULAR TRADING AND PRICE RIGGING BY THE OPERATORS WERE RESPONSIBLE FOR SUCH MOMENTOUS PRICE RISE OF A STOCK, DEFEATING THE FUND AMENTALS OF THE STOCK MARKET. THE SEBI ALSO ANALYZED THE DATA TO INFER THAT ALL T HE PERSONS INVOLVED IN THIS UNSCRUPULOUS TRADING ACTIVITY MISUSED THE STOCK EX CHANGE MECHANISM TO PROVIDE EXIT TO ALLOTTEE AT A HIGHER PRICE IN ORDER TO GENE RATE FICTITIOUS LONG TERM CAPITAL GAIN (LTCG). IT IS OBSERVED THAT THE ASSESSEE OFFL OADED THE SHARES AT THE ABSURDLY HIGH PRICE [ALMOST 5 TIMES THE PURCHASES P RICE]. THE RELEVANT DATA OF SOME OF THE TRANSACTIONS HAVE BEEN ANALYZED. ON ANA LYSIS IT IS SEEN THAT PAPER COMPANIES FLOATED BY VARIOUS OPERATORS PURCHASED TH OSE SHARES OF EXTREMELY HIGH PRICE, WHICH NORMALLY DID NOT HAVE ANY BUSINES S PRUDENCE. IT IS ALSO HIGHLY SIGNIFICANT THAT THE PRICE OF THE SHARES FELL VERY SHARPLY AFTER THE SHARES OF LTCG BENEFICIARIES WERE OFF LOADED THROUGH THE PRE-ARRAN GED TAN ON THE STOCK EXCHANGE FLOOR/PORTAL TO THE SHORT TERM LOSS SEEKER S OR DUMMY PAPER ENTITIES. G. THE STATEMENT OF NARENDRA PROBU DAYAL (PROMOTER OF TUNI TEXTILE MILLS LIMITED, AS FORWARDED BY THE INVESTIGATION WING) WA S RECORDED ON 022.06.2015. THE RELEVANT EXTRACTS ARE AS UNDER FOLLOWS. [QUOTE] STATEMENT ON OATH RECODED OF SHRI NARENDRA PRABHUDA YAL SUREKA, AGED 61 YEARS S/O LATE PRABHUDAYAL C. SUREKA, ON 02/.06.2015 U/S 131 OF THE INCOME TAX ACT, 1961., DURING THE COURSE OF SURVEY PROCEEDINGS U/S. 133A OF THE IT ACT, 1961 IN THE CASE OF M/S TUNI TEXTILE MILLS LIMITED, ROOM NO .53/54, 3 RD FLOOR,63/71 DADISETH AGLARY LANE, KALBAADEVI ROAD, MUMBAI-40000 2. ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 4 OATH ADMINISTERED SWEAR IN THE NAME OF GOD THAT I SHALL SPEAK TRUTH, ONLY THE TRUTH AND NOTHI NG BUT THE TRUTH. BEFORE ME SD/- SD/- MANTU KUMAR DAS NARENDRA PRABHUDAYAL SURREKA DDIT(INV.)U-5(4), MUMBAI DEPONENT Q.1 PLEASE IDENTIFY YOURSELF AND CONFIRM THAT OATH HAS BEEN ADMINISTERED ON YOU AND YOU WERE MADE AWARE OF GIVING FALSE STATEMENT U NDER OATH, BEFORE A PUBLIC AUTHORITY? ANS. I AM NARENDRA PRAPHUDAYAL SUREKA, AGED 61 YEAR S, S/O SHRI PRABHUDAYAL SUREKHA, RESIDING AT ASHRAY, 78, HATKESH SOCIETY, 9 TH ROAD, JVPD SCHEME, VILE PARLE WEST, MUMBAII-54, I CONFIRM THAT THE OATH HAS BEEN ADMINISTERED TO ME AND I HAVE BEEN MADE AWARE OF THE CONSEQUENCES OF GIVIN G A FALSE STATEMENT ON OATH BEFORE A PUBLIC AUTHORITY. Q-2 PLEASE GIVE YOUR EDUCATIONAL QUALIFICATION? ALS O, PLEASE CONFIRM THAT YOU CAN READ, WRITE AND UNDERSTAND ENGLISH LANGUAGE COM PLETELY? ANS. MY EDUCATIONAL QUALIFICATION IS B.COM. I FURTH ER CONFIRM THAT I CAN READ, WRITE AND UNDERSTAND ENGLISH LANGUAGE AND I SHALL BE COMF ORTABLE, IF ANY STATEMENT IS RECORDED IN ENGLISH. Q.3 PLEASE STATE YOUR PAN? ALSO STATE WITH WHOM YOU ARE ASSESSED TO TAX AND UP TO WHICH YEAR YOU HAVE FILED YOUR RETURN OF INCO ME? PLEASE PROVIDE THE COPY OF INCOME TAX RETURN FROM AY 2015-16. ALSO, STATE Y OUR SOURCE OF INCOME? ANS. MY PAN IS AACPP8853C. I DO NOT KNOW MY EXACT W ARD OFFICE. I HAVE FILED RETURN OF INCOME TILL DATE I.E. UPTO A.Y 2014-15. I AM PROVIDING YOU A COPY OF MY PAN. SIR, MY SOURCE OF INCOME IS REMUNERATION AS A DIREC TOR OF M/S TUNI TEXTILE MILLS LTD. AND INCOME FRO OTHER SOURCES. Q.4 PLEASE GIVE THE DETAILS OF YOUR FAMILY MEMBERS RESIDING WITH YOU AND THEIR OCCUPATION? ANS. THE FOLLOWING MEMBERS ARE RESIDING WITH ME. SL.NO. NAME RELATIONSHIP OCCUPATION 1 SMT URMILA N SUREKA WIFE DIRECTO OF M/S TUNI TEXTIL E LTD 2 SHRI PRADEEP P SUREKA BROTHER DIRECTOR OF M/S TUNI TE XTILE MILLS LTD. AND PROMOTER/SHAREHOLDER OF M/S YESHMANK INFN. PVT LTD. 3 SMT. ANNAPURNA P SUREKA SISTER-IN-LAW HOUSEWIFE 4 SMT. GEETADEVI P SUREKA MOTHER HOUSEWIFE 5 SHRI ARCHIT P SUREKA BROTHERS SON STUDENT Q.5 PLEASE GIVE THE DETAILS OF MOVABLE AND IMMOVABL E PROPERTIES OWNED BY YOU AND YOUR FAMILY MEMBERS? ANS. SIR, THE HOUSE AT ASHRAY,A 78 HATKESH SOCIETY, 9 TH ROAD, JVPD SCHEME, VILE PARIE WEST, MUMBAI-49 IS UDNER PAGDRI SYSTEM , AN D I HAVE NO OTHER IMMOVABLE PROPERTY. MY BROTHER SHRI PRADEEP P SUREKA HAS FLAT IN HIS NAME IN PUNE. THIS OFFICE PREMISE AT ROOM NO.53/54, 3 RD FLOOR, 63/71. DADISETH AGIARY LANE, KALBADEVI ROAD, MUMBAI-400002 IS IN THE NAME OF THE COMPANY M/S TUNI TEXTILE MILLS LTD AND THE NAME OF MY FATHER, LATE SHRI PRAB HUDAYAL SUREKA. THE FACTORY PREMISE AT B-4/5, MIDC MURBAD, HANE IS IN THE NAME OF THE COMPANY. Q.6 PLEASE GIVE THE DETAILS OF COMPANIES OR FIRMS I N WHICH YOU ARE DIRECTOR, PARTNER OR PROPRIETOR ALONG WITH YOUR SHARE HOLDING OR SHARE IN THE COMPANY AND PARTNERSHIP FIRM RESPECTIVELY. PLEASE ALSO STATE YO UR E-MAIL IDS AND YOUR PASSWORDS? ANS. I AM MANAGING DIRECTOR IN M/S TUNI TEXTILE MIL LS LTD. MY SHARE HOLDINGS IN THIS COMPANY ARE APPROXIMATE 40 LAKH SHARES. OTHER THAN THE ABOVE COMPANY I ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 5 AM NOT A DIRECTOR OR PARTNER OR PROPRIETOR IN ANY OTHER COMPANIES/FIRM. MY OFFICIAL EMAIL-ID IS [e-mail] AND THE PASSWORD IS TUNITEXTILE 1234. Q.7 PLEASE STATE FROM WHERE THE COMPANY M/S TUNI TE XTILE MILLS LTD RUN FROM, ALSO STATE WHAT IS THE BUSINESS OF THE COMPANIES? P LEASE ALSO STATE WHERE THE BOOKS OF ACCOUNT OF THE COMPANY ARE MAINTAINED? ANS. THE COMPANY IS IN THE BUSINESS OF MANU9FACTURI NG OF CLOTHS FROM YAM. THE COMPANY IS REGISTERED IN MUMBAI AND THE REGISTERED ADDRESS IS ROOM NO.53/54, 3 RD FLOOR, 63/71, DADISETH AGLARY LANE, KALABADEVI ROA D,MUMBAI-400002. THE COMPANY ALSO HAS A FACTORY PREMISE AT B-4/5, MIDC M URABAD, THANE. ALL THE BOOKS OF ACCOUNT ARE MAINTAINED IN THIS MUMBAI OFFI CE ONLY AND IN NO OTHER OFFICE. OTHER THAN THESE TWO, NO ANY OTHER ADDRESS ARE THER E OF THE COMPANY. Q8. PLEASE CONFIRM THAT THE BOOKS OF ACCOUNT OF M/S TUNI TEXTILE MILLS LTD ARE KEPT ONLY AT THIS OFFICE PREMISES AT ROOM NO.53/54, 3 RD FLOOR, 63/71, DADISETH AGLARY LANE, KALBADEVI ROAD, MUMBAI-400002 AND AT N O OTHER PREMISES. SIR, THE BOOKS ARE MAINTAINED IN TALLY SOFTWARE SIN CE FY 2014-15 AND IN FOXPRO BASED CUSTOMIZED SOFTWARE SINCE FY 2011-12 TO FY 20 13-14. Q.9 PLEASE STATE SINCE WHEN YOU ARE IN THE DIRECTOR /MANAGING DIRECTOR OF M/S TUNI TEXTILE MILLS LTD. ALSO STATE YOUR ROLE AS MAN AGING DIRECTOR IN M/S TUNI TEXTILE MILLS LTD. ALSO STATE IN WHICH YEAR THE COM PANY WAS LISTED WITH BSE. ANS. SIR, I AM MANAGING DIRECTOR IN THIS COMPANY SI NCE 06.07.1987 I.E. SINCE INCORPORATION OF THE COMPANY. SIR, AS A MANAGING DI RE TOR I LOOK AFTER ALL THE AFFAIRS OF THE COMPANY. I AM THE FINAL AUTHORITY IN RESPECT OF ENTIRE BUSINESS ACTIVITY AND ALL FINANCIAL MATTERS. TO THE BEST OF MY KNOWLEDGE THE COMPANY WAS LISTED WITH THE BSE IN 1996. Q.10 PLEASE STATE THE NAME OF THE OTHER DIRECTORS O F THE COMPANY M/S TUNI TEXTILE MILLS LTD AND ALSO STATE WHO APPOINTED THEM . ANS. SIR, THE DETAILS OF THE OTHER DIRECTORS OF THE COMPANY ARE AS FOLLOWS: SR. NO. NAME DIN DATE OF APPOINTMENT PLACE OF RESIDENCE 1 KUMAR PRAMOD PRASAD KASHI BAJAJ 01438374 01.02.2005 MUMBAI 2 PRADEEP P SUREKA 01632706 06.07.1987 MUMBAI 3 URMILA SUREKA 02344028 23.03.2015 MUMBAI 4 KAMALJI W DIXIT 06952563 13.02.2015 THANE 5 ADITDYA PROSHOTTAM KHAITAN 07009083 13.02.2015 THANE SIR, THE DIRECTORS WHO HAVE JOINED AFTER ME HAVE BE EN APPOINTED BY ME AS A I AM THE MANAGING DIRECTOR AND CHAIRMAN OF THE COMPANY. Q.11 PLEASE EXPLAIN THE ROLE AND RESPONSIBILITIES O F THESE DIRECTORS AND TELL THE NATURE OF WORK DONE BY THESE DIRECTORS IN M/S TUNI TEXTILE MILLS LTD. ANS. SIR, I ONLY LOOK AFTER THE DO DAY TO DAY ACTIV ITIES OF THE COMPANY. SHRI PRADEEP P SUREKA LOOKS AFTER THE MARKETING DIVISION OF THE COMPANY. THE OTHER DIRECTORS HAVE NO PARTICIPATION IN DAY TO DAY AFFAI RS OF THE COMPANY. I BRIEF THEM ON A REGULAR BASIS ABOUT THE DAY TO DAY AFFAIRS OF THE COMPANY AND ANY OTHER ACTIVITY. Q.12 PLEASE STATE WHETHER THE COMPANY M/S TUNI TEXT ILE MILLS LTD HAS ISSUED SHARES ON PREFERENTIAL BASIS? IF SO, PLEASE PROVIDE A LIST OF ALL THE ENTRIES/INDIVIDU9ALS WHICH HAVE PURCHASED THE SHARE S OF M/S TUNI TEXTILE MILLS LTD ON A PREFERENTIAL BASIS? ANS. SIR, I AM SUBMITTING THE LIST OF PREFERENTIAL ALLOTEES AS ANNAEXUTRE-1 TO THIS STATEMENT. A SHARE CAPITAL OF RS.7,50,00,000/- WAS RAISE BY ISSUING RS.75,00,000/- AT (RS.10 FACE VALUE) TO 47 HUFS/IND IVIDUALS ON 25.01.2010. Q.13 PLEASE PROVIDE THE ORIGINAL COPY OF THE APPLIC ATION FORM OF PREFERENTIAL ALLOTTEES AS LISTED IN ANNEXURE-1 TO THIS STATEMENT ? ANS. SIR, I DO NOT HAVE ANY OF THE DOCUMENTS. ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 6 Q.14. PLEASE EXPLAIN THE MEASURES THAT WERE TAKEN B Y YOU FOR RAISING MONEY THROUGH PREFERENTIAL ALLOTMENT? ANS. SIR, I HAVE NOT TAKEN ANY MEASURE TO RAISE MON EY THROUGH PREFERENTIAL ALLOTMENT. Q.15. PLEASE PRODUCE THE OFFER DOCUMENT THAT WAS IS SUED BY M/S TUNI TEXTILE MILLS LTD. FOR RAISING MONEY THROUGH SHARE PRESCRIP TION? ANS. SIR, NO OFFER DOCUMENT WAS ISSUED. Q.16 WERE ANY ADVERTISEMENTS ISSUED TO LET THE PUBL IC KNOW ABOUT THE PREFERENTIAL OFFER OF M/S TUNI TEXTILE MILLS LTD? ANS. NO. SIR, NO ADVERTISEMENTS WERE ISSUED IN THIS REGARD. Q. 17. PLEASE STATE WHETHER M/S TUNI TEXTILE MILLS LTD. TEXTILE HAS DECLARED DIVIDEND TO THE SHAREHOLDERS SINCE FY 2008-09 TO TI LL DATE? ANS. SIR, I DO NOT KNOW ANYTHING ABOUT THE HUFS/IND IVIDUALS WHICH HAVE PURCHASED THE SHARES OF M/S TUNI TEXTILE MILLS LTD. ON PREFERENTIAL BASIS. Q.18 PLEASE TELL WHAT YOU KNOW ABOUT THE HUFS/INDIV IDUALS WHICH HAVE PURCHASED SHARES OF M/S TUNI TEXTILE MILLS LTD. AT A PREMIUM? ANS. SIR, I DO NOT KNOW ANYTHING ABOUT THE HUFS/IND IVIDUALS WHICH HAVE PURCHASED THE SHARES OF M/.S TUNI TEXTILE MILLS LTD . ON PREFERENTIAL BASIS. Q.19. YOU HAVE STATED ON OATH THAT YOU DO NOT KNOW ABOUT ANY OF THE ENTITLES/INDIVIDUALS WHICH HAVE PURCHASED THE SHARE S OF M/S TUNI TEXTILE MILL LTD ON PREFERENTIAL BASIS. PLEASE EXPLAIN AS TO HOW THE SE HUFS/INDIVIDUALS INVESTED IN THE SHARES OF M/S TUNI TEXTILE MILLS LTD. HOW WE RE THESE HUFS/INDIVIDUALS APPROACHED AND WHERE DID YOU MEET THEM? ANS. SIR, I KNOW ONE SHRI MANISH BAID HIS MOB. NO.9 820051103 (HAVING HIS OFFICE AT 8 TH FLOOR. REHEJA TOWER ,NORIMAN POINT, MUMBAI IN THE NAME OF GCM SECURITIES) TROUGH A COMMON FRIEND, SIR THE COMPANY M/S TUNI TEXTILE MISS LTD WAS DELISTED DUE TO NON-COMPLIANCE WITH THE STATUTO RY REQUIREMENTS OF BSE. THEREAFTER, DUE TO CHANGE IN GOVT. POLICY AND ECONO MIC SCENARIO, THE COMPANY M/S TUNI TEXTILE MILLS LTD INCURRED LOSSES. THEN WE APPLIED WITH BIFR IN THE YEAR 2000. THIS UNIT WAS DECLARED SICK UNIT ON 16.04.200 02. THEREON, THE COMPANY WANTED TO REVIVE, HOWEVER, NO FINANCIAL INSTITUTION WAS FORTHCOMING TO FINANCE THE COMPANY. IN PURSUANCE OF FINANCE FOR THE COMPANY, I CAME IN CONTRACT WITH SHRI MANISH BAID, SHRI MANISH BAID SUGGESTED ME THE ROUT E OF PREFERENTIAL SHARES TO RAISE CAPITAL. HE BROUGHT ALL THE PARTIES WHO HAVE INVESTED IN THE COMPANY THROUGH PREFERENTIAL SHARE ALLOTMENT. I HAVE NEVER MET THESE PARTIES AND I HAVE NO KNOWLEDGE ABOUT THEIR BUSINESS ACTIVITIES. Q.20. YOU HAVE STATED THAT YOU DO NOT KNOW ANYTHING ABOUT ANY OF THE HUFS/INDIVIDUALS WHICH HAVE SUBSCRIBED THE SHARE OF M/S TUNI TEXTILE MILLS LTD ON PREFERENTIAL BASIS AND YOU HAVE NEVER MET ANY OF TH EM. YOU HAVE ALSO STATED THAT THESE HUFS/INDIVIDUALS INVESTED IN SHARES OF M/S TU NI TEXTILE MILLS LTD THROUGH SHRI MANISH BAID. PLEASE CONFIRM. ANS. SIR,I CONFIRM THAT I DO NO T KNOW THE DETAILS OF THE HUFS/INDIVIDUALS WHICH HAVE INVESTED IN SHARES OF M/S TUNI TEXTILE MILLS L TD AND I HAVE NEVER MET ANY OF THEM. I ONCE AGAIN CONFIRM THAT ALL THE PARTIES WRE INTRODUCED TO THE COMPANY BY SHRI MANISH BAID. FEW OF THE INVESTORS INCLUDING SH RI MANISH BAID (SL.NO.17,18,37,39 AND 40 OF ANNAEXURE-1) THOUGH TH E ROUTE PREFERENTIAL SHARES ALLOTMENT ARE THE FAMILY MEMBERS OF SHRI MANISIH BA ID. Q.21. PLEASE PRODUCE THE DETAILS OF THE AGMS THAT W ERE HELD DURING LAST 6 YEARS I.E. FROM FY 2009-10 IN THE CASE OF M/S TUNI TEXTIL E LTD, AND PLEASE PRODUCE THE MINUTES AND ATTENDANCE REGISTERS FOR THE SAME. PLEA SE TELL WHERE THESE AGDMS WERE HELD? ANS. SIR, THE AGMS WERE HELD AS FOLLOWS: DATE OF AGM PLACE OF AGM TIME OF AGM 30.09.2010 FY 2009-10 63/71, DADISETH AGLARY LANE, 3 RD FLOOR, KALBADEVI ROAD,MUMBAI-2 12.30 AM ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 7 30.09.2011 FINANCIAL YEAR.2011-12 RAME GUEST LINE HOTEL, 462,AB NAIR ROAD, OPP.SUN- N-SAND HOTEL, JUHU VILE PARLE (WEST), MUMBAI 11.30 AM 28.09.2012 FY 2011-12 RAME GUEST LINE HOTEL, 462, AB NAIR ROAD, OPP.SUN- N-SAND HOTEL, JUHU VILE PARIE WEST),MUMBAI 11.30 AM 2012-13 RAME GUEST LINE HOTEL, 462, AB NAIR ROAD, OP P.SUN- N-SAND HOTEL, JUHU VILE PARIE (WEST), MUMBAI 11,30 AM 26.09.2014 FINANCIAL YEAR 2013-14 RAME GUEST LINE HOTEL, 462, AB NAIR ROAD, OPP.SUN- N-SAND HOTEL,JUHU VILE PARLE (WEST), MUMBAI 11.30 AM SIR, I AM PRODUCING THE AGM FILE CONTAINS THE MINU TES OF THE ABOVE. AGMS, I AM ALSO PROVIDING YOU THE ATTENDANCE REGISTERS FOR FY 2011-12, FY 201-213 AND FY 2013-14. IN RESPECT OF THE ATTENDANCE REGISTER FOR FY 2009-10 AND FY 2010-11 ARE NOT AVAILABLE AT PRESENT. Q.22 PLEASE PROVIDE THE COPY OF THE NOTICES SENT TO THE SHAREHOLDERS LIST IN ANNEXURE-1 TO THIS STATEMENT? ANS. SIR, I AM NOT ABLE TO PROVIDE YOU THE SAME. Q.23 PLEASE CONFIRM THAT THE REGISTERS OF THE AGMS FOR THE FY 2011- 12(ANNEXURE-A3 PAGE NO.1 TO PAGE NO.4) FY 2012-13 ( ANNEXURE-A4, PAGE NO.1 TO PAGE NO.2) AND FY 2013-14 (ANNEXURE-A2, PAGE NO. 1 TO PAGE NO.2) IS PROVIDE BY YOU. PLEASE CONFIRM THAT THE SAME IS IMPOUNDED. IT IS OBSERVED FROM THE MINUTES OF THE MEETING OF AGM AND ATTENDANCE REGIST ER OF AGM PROVIDE BY YOU., ONE OF THE SHAREHOLDERS ASS LISTED IN ANNEXURE-1 TO THIS STATEMENT HAVE ATTENDED THE MEETINGS OF THE AGM. PEASE COMMENT? ANS. SIR, I DO CONFIRM THAT THE REGISTERS MARKED AS ANNEXURE-A2, A3, AND A4 ARE IMPOUNDED FROM THIS PREMISES AT 63/71, DADISETH AGL ARI LANE, 3 RD FLOOR, KALBADEVI ROAD, MUMBAI-2, FURTHER, AS STATED ABOVE THESE PARTIES ARE NOT KNOWN TO ME AS THEY WERE BROUGHT BY SHRI MANISH BAID. NON E OF THEM HAVE EVER ATTENDED THE AGMS OF THE COMPANY, M/STUNI TEXTILE M ILLS LTD. Q.24 WHAT WAS THE SHARE PRICE OF THE SHARES AT THE TIME OF PREFERENTIAL ALLOTMENT OF THE SHARES? ANS. SIR, THE COMPANY WAS AGAIN LISTED WITH THE BSE ON 13.03.2009. AS PER AVAILABLE RECORDS THE PRICE OF THE SHARES ON 10.05. 2010 WAS RS.0.65/-. Q.25. IT IS SEEN THAT THE PRICE OF THE SHARES OF M/ S TUNI TEXTILE MILLS LTD HAVE RISEN FROM RS.065/- ON 10.05.2010 TO RS.284.90 ON 05.11.2 012. THIS IS A RISE OF 17806% WITHIN A SPAN OF TWO YEARS. DURING THIS PERI OD THERE HAS BEEN NO CORPORATE ANNOUNCEMENT BY M/S TUNI TEXTILE MILLS LT D WHICH SUGGESTS THAT THE COMPANY IS UNDERTAKING ANY SUBSTANTIAL DEVELOPMENT ACTIVITY. FURTHER THERE IS NO SIGNIFICANT INCREASE IN TURNOVER OF THE COMPANY. IT IS ALSO SEEN FROM THE TRADING DETAILS OF M/S TUNI TEXTILES MILLS LEARNED. TEXTILE MILLS LTD THAT ALL THE PREFERENTIAL ALLOTTE ES HAVE SOLD THEIR SHARES DURING THE PERIOD WHEN THE PRICE OF THE SHARES WERE HOVERING A ROUND ITS PEAK LE RS.284.90 ON 05.11.2012. ONCE THE PREFERENTIAL ALLOTTEES SOLD THEIR SHARES THE PRICE OF THE SHARES OF M/S. TUNI TEXTILES MILLS LTD TOOK A DIP A ND THE CURRENT PRICE OF SHARES AS ON TODAY LE 02.06.2015 IS RS.0.47/-. IN LIGHT OF TH ESE FACTS KINDLY EXPLAIN THE PHENOMENAL RISE IN THE PRICE OF THE SHARES OF M/S. TUNI TEXTILES MILLS LTD? ANS. SIR, M/S TUNL TEXTILE MILLS LTD IS A PENNY STO CK COMPANY AND THE SHARES OF THE COMPANY HAVE BEEN USED TO PROVIDE ENTRY OF BOGU S LONG TERM CAPITAL GAIN TO THE PREFERENTIAL ALLOTTEES. THE ENTIRE SCHEME HA S BEEN MANAGED AND CONTROLLED BY SHRL MANLSH BAID. AS STATED EARLIER, SHRI MANISH BALD HAS BROUGHT THE PREFERENTIAL SHARE ALLOTTEES AS INVESTOR AND ENTIRE TRANSACTION PROCESS RELATED TO THE PARTIES LISTED IN ANNEXURE-L TO THE STATEMENT H AVE BEEN MANAGED BY SHRI MANLSH BALD. Q.26. PLEASE EXPLAIN IN DETAIL THE MODUS OPERANDI O F PROVIDING BOGUS LONG TERM CAPITAL GAIN IN THE SCRIP OF M/S. TUNI TEXTILE MILL S LTD? ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 8 ANS. SIR, ALL THESE AFFAIRS HAVE BEEN ENTIRELY MANA GED BY SHRL MANLSH BALD. THE SHARES OF M/S. TUNI TEXTILE MILLS LIMITED WERE ISSU ED TO THE BENEFICIARIES OF BOGUS LONG TERM CAPITAL GAIN BY SHRL MANISH BAID. THESE S HARES WERE ALLOTTED ON PREFERENTIAL BASIS THROUGH THE ROUTE OF PRIVATE PLA CEMENT. THEREAFTER, THE SHARES OF M/S. TUNI TEXTILE MILLS LIMITED WERE RIGGED BY W AY OF CIRCULAR TRADING AND THE PRICE OF THE SHARES WAS JACKED UP. ONCE A PERIOD OF ONE YEAR WAS OVER AFTER THE ISSUE OF PREFERENTIAL SHARES (PRE-REQUISITE FOR CLA IMING EXEMPTION ON LTCC), THE BENEFICIARIES WERE ASKED TO DEPOSIT CASH TO SHRI MA NISH BAID AND SELL THEIR SHARES ON THE STOCK EXCHANGE. THE SHARES OF THE BEN EFICIARIES WERE PURCHASED BY BOGUS/PAPER ENTITIES MANAGED AND CONTROLLED BY S HRL MANISH BAID AND THESE BOGUS/PAPER COMPANIES USED THE CASH PROVIDED BY THE BENEFICIARIES TO PURCHASE THE SHARES OF THE BENEFICIARIES. IN THIS WAY THE UN ACCOUNTED CASH OF THE BENEFICIARIES WERE ROUTED TO THE BOOKS OF THE BENEF ICIARIES AS ENTRY OF LONG TERM CAPITAL GAIN THROUGH THE ROUTE OF STOCK EXCHANGE. I N THIS PROCESS SOME ENTITIES HAVE ALSO BEEN GIVEN ENTRY OF SHORT TERM CAPITAL LO SS/BUSINESS LOSS BY WAY OF PURCHASING THE SHARES AT HIGH PRICES AND SELLING TH EM WHEN THE PRICES HAVE GONE DOWN. Q.27. PLEASE STATE, WHETHER THERE HAVE BEEN ANY SPL IT OF THE SHARES OF M/S TUNI TEXTILE MILLS LTD. ALSO STATE THE REQUIREMENT TO DO SUCH AN ACT OF SPLIT OF THE SHARES OF M/S. TUNL TEXTILE MILLS LTD.? ANS. SIR, THE SPLIT OF THE SHARES OF M/S.TUNI TEXTI LE MILLS LTD WAS CARRIED OUT ON 07.04.2011. THE SPLIT WAS EARNED OUT AS PER SUGGEST ION OF SHRI MANISH BAID. I HAVE NO IDEA FOR THE REASON/PURPOSE FOR WHICH SUCH SPLIT OF THE SHARES OF TUNI TEXTILE MILLS LTD. WAS REQUIRED. Q.28. PLEASE STATE, WHETHER ANY BONUS SHARES WERE I SSUED IN THE SHAREHOLDERS OF M/S. TUNI TEXTILE MILLS LTD. ALSO STATE THE REQUIRE MENT TO DO SUCH AN ACT OF ISSUE OF BONUS SHARES OF M/S. TUNL TEXTILE MILLS LTD? ANS. SIR, NO BONUS SHARES WERE ISSUED ,TO ANY SHARE HOLDERS OF M/S. TUNI TEXTILE MILLS LTD TILL DATE. Q.29. I AM SHOWING YOU THE STATEMENTS OF AS FOLLOWS : SHRL SANJAY VORA OF ANAND RATHI SHARE BROKER SHRL BLKASH SUREKE/SUBRATA HALDER OF BSAS SECURIT IES PVT. LTD. SHRL ABHLSEK KAYAN OF DYNAMIC EQUITIES SERVICES L TD. SHRI PRAVEEN AGARWAL OF GATEWAY FINANCIAL SERVICES LTD. SHRI ASHOK KAYAN OF KAYAN SECURITIES PVT. LTD. PRADEEP LAIN OF NKAMLCHI SECURITIES LTD. PAWAN K. KAYAN OF PKC COMMODITIES LTD & SUBH STOCK BROKING PVT. LTD. SHRL NARENDRA BELASIA OF STLLC GLOBAL SECURITIES L TD. SHRI SUNIL KUMAR KAYAN OF SUNLL KUMAR KAYAN & CO. SHRI ANLL AGARWAL OF M/S COMFORT SECURITIES LTD. THE ABOVE MENTIONED PARTIES IN THE STATEMENT WITHIN THE PROVISIONS OF INCOME - TAX ACT,1961, UNDER OATH HAVE STATED THAT THE SCRIP OF M/S.TUNI TEXTILE MILLS LTD. HAS BEEN USED TO PROVIDE BOGUS LONG TERM CAPITAL GA IN AND SHORT TERM CAPITAL L.OSS. FURTHER, THE OPERATORS SHRI ANIL KHEMKA, ARU N KUMAR KHEMKA, JAGDISH PUROHIT, DEVESH UPADHYAYA, NARENDRA KR. LAIN, NAVNE ET SLNGHANIA, PRLTAM BERLA, PRAVEEN AGARWAL AND OTHERS IN THEIR SWOM STATEMENT WITHIN THE PROVISIONS OF THE INCOME TAX ACT,1961 UNDER OATH HAVE ACCEPTED THAT T HEY HAVE USED THEIR PAPER COMPANIES FOR ACCOMMODATION ENTRIES IN BOGUS LONG T ERM CAPITAL GAIN & SHORT TERM CAPITAL LOSS IN THE SCRIP OF M/S TUNI TEXTILE MILLS LTD. PLEASE COMMENT? ANS. SIR, I HAVE STATED ALREADY THAT T-M/S TUNI TEX TILE MILLS LIMITED IS A PENNY STOCK COMPANY AND THE SHARES OF THE COMPANY HAVE BE EN USED TO PROVIDE ENTRY ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 9 OF BOGUS LONG TERM CAPITAL GAIN AND SHORT TERM CAPI TAL LOSS. THESE ENTIRE AFFAIRS HAVE BEEN MANAGED BY SHRI MANISH BAID AND O NLY HE WILL BE ABLE TO EXPLAIN THE SAME. Q.30. I AM ONCE AGAIN REMINDING YOU THAT THE STATEM ENT IS BEING GIVEN BY YOU ON OATH AND YOU ARE BOUND BY LAW TO SPEAK TRUTH AND NO T TO HIDE ANY FACT. I REQUEST YOU TO PLEASE GO THROUGH THE RESPONSES GIVEN BY YOU TO THE ABOVE QUESTIONS AND KINDLY CONFIRM THAT YOU HAVE UNDERSTOOD THE CONTENT OF THE QUESTIONS POSED TO YOU AND YOU ARE STATING THE TRUTH. ANS. SIR, I CONFIRM THAT I AM SPEAKING THE TRUTH AN D I AM AWARE OF THE CONSEQUENCES OF GIVING FALSE STATEMENT ON OATH. Q.31. PLEASE STATE, HOW THE AMOUNT OF RS. 7,50,00,0 00/- WAS TREATED IN THE BOOKS OF M/S TUNI TEXTILE MILLS LTD. PLEASE SUBSTANTIATE THE SAME DOCUMENTARY EVIDENCES. ANS. SIR, THE AMOUNT RECEIVED AS INVESTMENT THROUGH PREFERENCE SHARE ALLOTMENT WAS UTILIZED FOR THE BUSINESS AFFAIRS OF THE BUSINE SS ACTIVITIES OF M/S TUNL TEXTILE MILLS LTD IN THE FORM OF CAPITAL INVESTMENT. A SEPA RATE BANK ACCOUNT WAS CREATED FOR THIS. Q.32. PLEASE PROVIDE THE DETAILS OF THE BANK ACCOUN T INTO WHICH THE AMOUNT OF RS 7,50,00,000/- WHICH WAS RECEIVED FROM THE INVESTORS IN LIEU OF THE PREFERENCE SHARE ALLOTMENT WAS DEPOSITED. ANS. SIR, FOR THIS PURPOSE A SEPARATE BANK ACCOUNT WAS OPENED WITH INDIAN OVERSEAS BANK, NARIMAN POINT. THE A/C NO IS 062502000006714. Q.33. PLEASE PROVIDE THE DETAILS OF THE CAPITAL INV ESTMENT FROM 01/04/2009 TO TILL DATE ALONG WITH COPY OF BILLS/VOUCHERS. ANS. SIR, AT PRESENT I AM UNABLE TO PROVIDE THE SAM E. Q.34. PLEASE PROVIDES THE DETAILS OF THE BANK A/C A RE MAINTAINED BY M/S TUNI TEXTILES MILLS LTD SINCE 01/04/2009. ANS. SIR, I AM PROVIDING YOU THE DETAILS OF THE BAN K ALC AS ANNEXURE-2 TO THIS STATEMENT. NO OTHER BANK A/C WAS OPERATIONAL IN THI S PERIOD. Q.38. AS PER THE BOOKS OF ACCOUNT, THE CASH EXPENSE S HAVE BEEN BOOKED TILL 08/05/2015 AND THE CASH IN HAND AS ON 08/05/2015 WA S RS.23,96,019/- IN SUCH A SCENARIO WHAT WAS THE NEED TO WITHDRAW FURTHER CASH OF RS.2,00,000/- ON 09.05.2015, RS.8,00,000 ON 11.05.2015 AND RS.2,00,OOO/- ON 30.0 5.2015? PLEASE COMMENT. ANS. SIR, THERE ARE CERTAIN EXPENSES PAID TO THE WO RKERS WHICH ARE YET TO BE ENTERED IN THE BOOKS. AS STATED ABOVE, I WILL RECONCILE THE SAME AND PROVIDE YOU THE DETAILS IN DUE COURSE. Q.35. IT IS SEEN FROM THE TRIAL BALANCE (ANNEXURE-3 TO THIS STATEMENT) PROVIDED BY YOU AS ON 02/06/2015, THE CASH IN HAND IS RS 35,96,019. 36/-. HOWEVER DURING THE COURSE OF THIS SURVEY ACTION AT THIS PREMISE AT 63/71, 3RD FLOOR, DADISETH AGLARY LANE, KALBADEVI ROAD, MUMBAL-2, NO PHYSICAL CASH HAS BEEN FOUND. PLEASE EXPLAIN THE SAME. PLEASE STATE, WHO IS THE AUTHORIZED PERSON IN M/S TUNI TEXTILE MILLS LTD TO WITHDRAW CASH FROM THE BANK. ANS. SIR, WE MAKE SALARY AND WAGES PAYMENTS IN CASH . SALARY AND WAGES PAYMENTS HAVE BEEN MADE TO EMPLOYEES AND FACTORY LABOURS, AN D THE SAME HAS NOT BEEN ENTERED INTO THE BOOKS IN THE TALLY SYSTEM. I WILL RECONCILE THE SAME IS PROVIDE THE RECONCILED STATEMENT IN DUE COURSE. SIR, I AM THE A UTHORIZED PERSON IN M/S TUNI TEXTILE MILLS LTD TO WITHDRAW CASH FROM THE BANK. Q.36. PLEASE PROVIDE THE MONTH- WISE CASH BOOK SINC E 01/04/2014 TO 31/03/2015 AND DAILY CASH BOOK SINCE 01/04/2015 TO TILL DATE. ANS. SIR, I AM PROVIDING YOU THE SAME AS ANNEXURE-4 TO THIS STATEMENT. Q.37. WHAT IS THE MONTHLY QUANTUM OF THESE CASH EXP ENSES? ANS. SIR, THE AVERAGE MONTHLY CASH EXPENSES ARE ARO UND RS. 10 LAC TO RS. 12 LACS. Q.39 I AM ONCE AGAIN REMINDING YOU THAT THIS STATEM ENT IS BEING GIVEN BY YOU ON OATH AND YOU ARE BOUND BY LAW TO SPEAK TRUTH AND NO T TO HIDE ANY FACT. I REQUEST YOU TO PLEASE GO THROUGH THE RESPONSES GIVEN BY YOU TO THE ABOVE QUESTIONS AND KINDLY ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 10 CONFIRM THAT YOU HAVE UNDERSTOOD THE CONTENT OF THE QUESTIONS POSED TO YOU AND YOU ARE STATING THE TRUTH? ANS. SIR, I CONFIRM THAT I AM SPEAKING TRUTH AND I AM AWARE OF THE CONSEQUENCES OF GIVING FALSE STATEMENT ON OATH. Q.40 PLEASE CONFIRM THAT DURING THE SURVEY PROCEEDI NG, THE DATA BACKUP AS PER ANNEXURE-A1 IN 16GB PEN DRIVE HAS BEEN TAKEN FROM T HIS PREMISE AT 63/71, 3RD FLOOR, DADISETH AGLARY LANE, KALBADEVI ROAD, MUMBAL -400002 HAS BEEN IMPOUNDED. ANS. SIR, I CONFIRM THE SAME. Q.41 DO YOU HAVE TO SAY ANYTHING ELSE? ANS. NO. SIR. I HAVE READ THE STATEMENT RECORDED AN D I UNDERSTAND IT. WHATEVER STATED ABOVE IS TRUE TO THE BEST OF MY BELIEF AND K NOWLEDGE AND HAS BEEN CORRECTLY RECORDED. I HAVE GIVEN THIS STATEMENT IN SOUND STAT E OF MIND WITHOUT ANY THREAT, COERCION, AND COMPULSION OR UNDER ANY UNDUE PRESSUR E. I SHALL ABIDE BY MY STATEMENT. FURTHER, I WOULD LIKE TO STATE THAT HIS STATEMENT HAS BEEN GIVEN BETWEEN 3.00 PM TO 10.00 PM WITH REGULAR INTERVAL OF BREAKS IN BETWEEN. (SIGNED) (SIGNED) [UNQUOTE] 2. THE ABOVE FEATURES AND STATEMENT OF THE PROMOTER CLEARLY INDICATE THAT THE ENTIRE TRANSACTIONS WERE MERELY ACCOMMODATION ENTRIES TAKE N FOR THE PURPOSE OF SUCH BOGUS LONG TERM CAPITAL GAIN MADE BY THE ASSESSEE D URING THE PREVIOUS YEAR. IT IS APPARENT THAT, IN THE GRAB OF ALLEGED LTCG, THE ASS ESSEE EARNED EXEMPT INCOME OF RS.67,24,391/- AND HUGE AMOUNTS WERE BROUGHT INTO T HE BOOKS WITHOUT PAYMENT OF ANY TAXES. I FIND IT PERTINENT TO MENTION HERE THAT IN CIT VS NR PORTFOLIO PVT LTD ON 22 NOVEMBER, 2013, THE HON'BLE DELHI HIGH COURT HAS HE LD ..... 'THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR. WHEN A FACT IS ALLEGED AND STATED BEFORE THE ASSESSING OFF ICER BY AN ASSESSEE, HE MUST AND SHOULD EXAMINE AND VERIFY, WHEN IN DOUBT O R WHEN THE ASSERTION IS DEBATABLE. NORMALLY A FACTUAL ASSERTION MADE SHOULD BE ACCEPTED BY THE ASSESSING OFFICER UNLESS FOR JUSTIFICATION AND REAS ONS THE ASSESSING OFFICER FEELS THAT HE NEEDS/REQUIRES A DEEPER AND DETAILED VERIFICATION OF THE FACTS ALLEGED. THE ASSESSEE IN SUCH CIRCUMSTANCES SHOULD COOPERATE AND FURNISH PAPERS, DETAILS AND PARTICULARS. THIS MAY ENTAIL IS SUE OF NOTICES TO THIRD PARTIES TO FURNISH AND SUPPLY INFORMATION OR CONFIRM FACTS OR EVEN ATTEND AS WITNESSES. THE ASSESSING OFFICER CAN ALSO REFER TO INCRIMINATING MATERIALS OR EVIDENCE AVAILABLE WITH HIM AND CALL UPON THE ASSES SEE TO FILE THEIR RESPONSE. WE CANNOT LAY DOWN OR STATE A GENERAL OR UNIVERSAL PROCEDURE OR METHOD WHICH SHOULD BE ADOPTED BY THE ASSESSING OFFICER WH EN VERIFICATION OF FACTS IS REQUIRED. THE MANNER AND MODE OF CONDUCTING ASSESSM ENT PROCEEDINGS HAS TO BE LEFT TO THE DISCRETION OF THE ASSESSING OFFIC ER, AND THE SAME SHOULD BE JUST, FAIR AND SHOULD NOT CAUSE ANY HARASSMENT TO T HE ASSESSEE OR THIRD PERSONS FORM WHOM CONFIRMATION OR VERIFICATION IS R EQUIRED. THE VERIFICATION AND INVESTIGATION SHOULD BE ONE WITH THE LEAST AMOU NT OF INTRUSION, INCONVENIENCE OR HARASSMENT ESPECIALLY TO THIRD PAR TIES, WHO MAY HAVE ENTERED INTO TRANSACTIONS WITH THE ASSESSEE. THE UL TIMATE FINDING OF THE ASSESSING OFFICER SHOULD REFLECT DUE APPLICATION OR MIND ON THE RELEVANT FACTS AND THE DECISION SHOULD TAKE INTO CONSIDERATION THE ENTIRE MATERIAL, WHICH IS GERMANE AND WHICH SHOULD NOT BE IGNORED AND EXCLUDE THAT WHICH IS IRRELEVANT. CERTAIN FACTS OR ASPECTS MAY BE NEUTRAL AND SHOULD BE NOTED. THESE SHOULD NOT BE IGNORED BUT THEY CANNOT BECOME THE BEDROCK OR SUBSTRATUM OF THE CONCLUSION. THE PROVISIONS OF EVI DENCE ACT ARE NOT APPLICABLE, BUT THE ASSESSING OFFICER BEING A QUASI JUDICIAL AUTHORITY, MUST TAKE CARE AND CAUTION TO ENSURE THAT THE DECISION IS REA SONABLE AND SATISFIES THE CANONS OF EQUITY, FAIRNESS AND JUSTICE. THE EVIDENC E SHOULD BE IMPARTIALLY AND ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 11 OBJECTIVELY ANALYZED TO ENSURE THAT THE ADVERSE FIN DINGS AGAINST THE ASSESSEE WHEN RECORDED ARE ADEQUATELY AND DULY SUPPORTED BY MATERIAL AND EVIDENCE AND CAN WITHSTAND THE CHALLENGE IN APPELLATE PROCEE DINGS. PRINCIPLE OF PREPONDERANCE OF PROBABILITIES APPLIES. WHAT IS STA TED AND THE SAID STANDARD, EQUALLY APPLY TO THE TRIBUNAL AND INDEED THIS COURT . THE REASONING AND THE GROUNDS GIVEN IN ANY DECISION OR PRONOUNCEMENT WHIL E DEALING WITH THE CONTENTIONS AND ISSUES SHOULD REFLECT APPLICATION O F MIND ON THE RELEVANT ASPECTS. WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO AVOID APPEARANCE BEFORE THE ASSESSING OFFICER, IT NECESSA RILY CREATES DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACT S AS THE ASSESSING OFFICER IS DENIED ADVANTAGE OF THE CONTENTION OR FACTUAL AS SERTION BY THE ASSESSEE BEFORE HIM. IN CASE AN ASSESSEE DELIBERATELY AND IN TENTIONALLY FALLS TO PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH THE DESI RE TO PREVENT INQUIRY OR INVESTIGATION, AN ADVERSE VIEW SHOULD BE TAKEN'. 3. IN THIS CONNECTION, RELIANCE IS ALSO PLACED ON T HE DECISION OF ITAT BOMBAY BENCH 'B' (ITA NO.614/BOM/87 A.Y. 1983-84) IN THE CASE OF M/S. MONT BLANE PROPERTIES AND INDUSTRIES PVT. LTD ., WHICH WAS UPHELD BY THE HON'BLE SUPREME COURT. T HE HON'BLE TRIBUNAL HELD THAT THE WORD ' EVIDENCE ' AS USED IN SEC. 143(3) COVERED CIRCUMSTANTIAL EVIDENCE ALSO. THE WORD ' EVIDENCE ' AS USED IN SEC.143(3) OBVIOUSLY COULD NOT BE CONFINED TO DIRECT EVIDENCE. THE WORD ' EVIDENCE ' WAS COMPREHENSIVE ENOUGH TO COVER THE CIRCUMSTANTIAL EVIDENCE ALSO. U NDER THE TAX JURISPRUDENCE, THE WORD ' EVIDENCE ' HAD MUCH WIDER CONNOTATIONS. WHILE THE WORD 'EVID ENCE' MIGHT RECALL THE ORAL AND DOCUMENTARY EVIDENCE AS MAY BE ADMISSI BLE UNDER THE INDIAN EVIDENCE ACT THE USE OF WORD 'MATERIAL' IN SEC.143(3) SHOWED THAT THE ASSESSING OFFICER, NOT BEING A COURT COULD RELY UPON MATERIAL, WHICH MIGHT NOT STRICTLY BE EVIDENCE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT FOR THE PU RPOSE OF MAKING AN ORDER OF ASSESSMENT. COURT OFTEN TOOK JUDICIAL NOTICE OF CER TAIN FACTS WHICH NEED NOT BE PROVED BEFORE THEM. THE PLAIN READING OF SECTION 14 2 AND 143 CLEARLY SUGGESTS THAT THE ASSESSING OFFICER MAY ALSO ACT ON THE MATERIAL GATHERED BY HIM. THE WARD 'MATERIAL' CLEARLY SHOWS THAT THE ASSESSING OFFICER IS NOT FETTERED BY THE TECHNICAL RULES OF EVIDENCE AND THE LIKE, AND THAT HE MAY ACT ON MA TERIAL WHICH MAY NOT STRICTLY SPEAKING BE ACCEPTED EVIDENCE IN COURT OF LAW. 4. THE HON'BLE SUPREME COURT IN CIT V. DURGA PRASAD MORE[1971] 82 ITR 540 AT PAGES 545-547 MADE A REFERENCE TO THE TEST OF HUMAN PROBABILITIES IN THE FOLLOWING FACT SITUATION : IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A D EED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS. OTHERWISE IT WILL BE VERY EASY T O MAKE SETT- SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS T O EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE-OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS N OT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS . 5. IT IS WELL SETTLED PRINCIPLE OF LAW AS DECLARED BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS.CIT (214 ITR 801)(SC) THAT THE TRUE NATURE OF TRANSACTION HAVE TO BE ASCERTAINED IN THE LIGHT OF SURROUNDING CIRCUMSTANCES. IT NEEDS TO BE EMPHASIZED THAT STANDARD OF PROOF BEYOND REASONABLE DOUBT HAS NO APPLICABILITY IN ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 12 DETERMINATION OF MATTERS UNDER TAXING STATUTES. IN THE PRESENT CASE, IT IS CLEAR THAT APPARENT IS NOT THE REAL AS EVIDENCE FROM THE INVES TIGATION REPORT. THE HON'BLE SUPREME COURT, IN THE CASE OF CHUHAR MAL V CIT (198 8) 172 ITR 250, HIGHLIGHTED THE FACT THAT THE PRINCIPLE OF EVIDENCE LAW ARE NOT TO BE IGNORED BY THE AUTHORITIES, BUT AT THE SAME TIME, HUMAN PROBABILITY HAS TO BE THE GUID ING PRINCIPLE, SINCE THE AO IS NOT FETTERED, BY TECHNICAL RULES OF EVIDENCE, AS HELD B Y THE HON'BLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS V CIT (1954) 261 T R 775. THE HON'BLE SUPREME COURT, IN THE CASE OF CHUHAR MAL V CIT (SUPRA) HELD THAT WHAT WAS MEANT BY SAYING THAT EVIDENCE ACT DID NOT APPLY TO THE PROCEEDINGS UNDER INCOME-TAX ACT,1961, WAS THAT THE RIGORS OF RULES OF EVIDENCE, CONTAINED IN THE EVIDENCE ACT WAS NOT APPLICABLE; BUT THAT DID NOT MEAN THAT WHEN THE TAX ING AUTHORITIES WERE DESIROUS OF INVOKING THE PRINCIPLES OF EVIDENCE ACT, IN PROCEED INGS BEFORE THEM, THEY WERE PREVENTED FROM DOING SO. IT WAS FURTHER HELD BUY TH E HON'BLE APEX COURT THAT ALL THAT SECTION 110 OF THE EVIDENCE ACT, 1872 DID, WAS TO E MBODY A SALUTARY PRINCIPLE OF COMMON LAW, JURISPRUDENCE VIZ, WHERE A PERSON WAS F OUND IN POSSESSING OF ANYTHING, THE ONUS OF PROVING THAT HE WAS NOT ITS OWNER, WAS ON THAT PERSON. THUS, THIS PRINCIPLE COULD BE ATTRACTED TO A SET OF CIRCUMSTANCES THAT S ATISFIES ITS CONDITIONS AND WAS APPLICABLE TO TAXING PROCEEDINGS. 6. AFTER EXAMINING ALL THE ISSUE, I FIND MYSELF IN AGREEMENT WITH THE LD. AO THAT THE TRANSACTIONS RELATING TO THE CLAIM OF LTCG AS MADE BY THE LD. AO COME WITHIN THE AMBIT OF ' SUSPICIOUS TRANSACTIONS ', AND THEREFORE THE RULES OF SUSPICIOUS TRANSACTIONS WOULD APPLY TO THE CASE. PAYMENT THROU GH BANKS, PERFORMANCE THROUGH STOCK EXCHANGE AND OTHER SUCH FEATURES ARE ONLY APP ARENT FEATURES. THE REAL FEATURES ARE THE MANIPULATED AND ABNORMAL PRICE OF OFF LOAD AND THE SUDDEN DIP THEREAFTER. THEREFORE, I HAVE TO REACH THE INEVITAB LE CONCLUSION THAT THE TRANSACTIONS AS DISCUSSED BY THE LD.AO FALL IN THE REALM OF ' SUSPICIOUS ' AND ' DUBIOUS ' TRANSACTIONS. THE LD. AO HAS THEREFORE NECESSARILY TO CONSIDER THE SURROUNDING CIRCUMSTANCES, WHICH HE INDEED HAS DONE IN A VERY M ETICULOUS AND CAREFUL MANNER. IN THE CASE OF WIN CHADHA VS CIT (INTERNATIONAL TAX ATION) IN ITA NO.3088 & 3107/DEL/2005, THE HON'BLE DELHI ITAT 'B'-BENCH HAS OBSERVED, ON 31.12.2010 AS UNDER: 'SUSPICIOUS AND DIBIOUS TRASANCTION HOW TO BE DEALT WITH: 6.11. THE TAX LIABILITY IN THE CASES OF SUSPICIOUS TRANSACTIONS, IS TO BE ASSESSED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD, SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT, PREPONDERANCE OF PROB ABILITIES AND NATURE OF INCRIMINATING INFORMATION/ EVIDENCE AVAILABLE WITH AO. 6.12. IN THE CASE OF SUMATI DAYAL V. CIT (1995) 80 TAXMAN 89 (SC), THE HON'BLE SUPREME COURT HAS DEALT WITH THE RELEVANCE OF HUMAN CONDUCT, PREPONDERANCE OF PROBABILITIES AND SURROUNDING CIRC UMSTANCE, BURDEN OF PROOF AND ITS SHIFTING ON THE DEPARTMENT IN CASES OF SUSP ICIOUS CIRCUMSTANCES, BY FOLLOWING OBSERVATIONS: .... IT IS, NO DOUBT, TRUE THAT IN ALL CASES IN WH ICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTME NT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION AND IF A RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE BECAUS E IT FALLS WITHIN EXEMPTION PROVIDED BY THE ACT LIES UPON THE ASSESSE E. BUT IN VIEW OF SECTION 68, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHA RGED TO INCOME- TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS VEER IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER , NOT SATISFACTORY. IN SUCH CASE THERE IS PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE, VIZ., ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 13 THE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT THE SAME, THE SAID EVIDENCE BEING UNREBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT IS A RECEIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE DEPARTMENT CANNOT, HOWEVER, ACT U NREASONABLY . .......... HAVING REGARD TO THE CONDUCT OF THE APPE LLANT AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON TH E RECORD, AN INFERENCE COULD REASONABLY BE DRAWN THAT THE WINNIN G TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT. THE MAJ ORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAD RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES, WAS NOT GENUINE. IT COULD NOT BE SAID THAT THE EXPLANATION OFFERED BY T HE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAD BEEN REJECTED UNREA SONABLY AND THAT THE FINDING THAT THE SAID AMOUNTS WERE INCOME OF TH E APPELLANT FROM OTHER SOURCES WAS NOT BASED ON EVIDENCE.'' CIRCUMSTANTIAL EVIDENCE HOW TO BE USED 6.13. IT WOULD, AT THIS STAGE, BE RELEVANT TO CONSI DER THE ADMISSIBILITY AND USE OF CIRCUMSTANTIAL EVIDENCE IN INCOME TAX PROCEEDING S. CIRCUMSTANTIAL EVIDENCE IS EVIDENCE OF THE CIRCUMSTANCES, AS OPPOS ED TO DIRECT EVIDENCE. IT MAY CONSIST OF EVIDENCE AFFORDED BY THE BEARING ON THE FACT TO BE PROVED, OF OTHER AND SUBSIDIARY FACTS, WHICH ARE RELIED ON AS INCONSISTENT WITH ANY RESULT OTHER THAN THE TRUTH OF THE PRINCIPAL FACT. IT IS E VIDENCE OF VARIOUS FACTS, OTHER THAN THE FACT IN ISSUE WHICH ARE SO ASSOCIATED WITH THE FACT IN ISSUE, THAT TAKEN TOGETHER, THEY FORM A CHAIN OF CIRCUMSTANCES LEADIN G TO AN INFERENCE OR PRESUMPTION OF THE EXISTENCE OF THE PRINCIPAL FACT. IN THE APPRECIATION OF CIRCUMSTANTIAL EVIDENCE, THE RELEVANT ASPECTS, AS L AID DOWN FROM TIME TO TIME ARE - (1) THE CIRCUMSTANCES ALLEGED MUST BE ESTABLISHED B Y SUCH EVIDENCE, AS IN THE CASE OF OTHER EVIDENCE (2) THE CIRCUMSTANCES PROVED MUST BE OF A CONCLUSIV E NATURE AND NOT TOTALLY INCONSISTENT WITH THE CIRCUMSTANCES OR CONT RADICTORY TO OTHER EVIDENCE. (3) ALTHOUGH THERE SHOULD BE NO MISSING LINKS IN TH E CASE, YET IT IS NOT ESSENTIAL THAT EVERY ONE OF THE LINKS MUST APPEAR O N THE SURFACE OF THE EVIDENCE ADDUCED I SOME OF THESE LINKS MAY HAVE TO BE INFERRED FROM THE PROVED FACTS; (4) IN DRAWING THOSE INFERENCES OR PRESUMPTIONS, TH E AUTHORITIES MUST HAVE REGARD TO THE COMMON COURSE OF NATURAL EVENTS, TO HUMAN CONDUCT AND THEIR RELATION TO THE FACTS OF THE PART ICULAR CASE. (5)THE CIRCUMSTANTIAL EVIDENCE CAN, WITH EQUAL FACI LITY, BE RESORTED TO IN PROOF OF A FACT IN ISSUE WHICH ARISES IN PROCEED INGS FOR THE ASSESSMENT OF TAXES BOTH DIRECT AND INDIRECT, CIRCU MSTANTIAL EVIDENCE CAN BE MADE USE OF IN ORDER TO PROVE OR DISPROVE A FACT ALLEGED OR IN ISSUE. IN FACT, IN WHATEVER PROCEEDINGS OR CONTEXT INFERENCES ARE REQUIRED TO BE DRAWN FROM THE EVIDENCE OR MATERIALS AVAILABLE OR LACKING, CIRCUMSTANTIAL EVIDENCE HAS ITS PLACE TO A SSIST THE PROCESS OF ARRIVING AT THE TRUTH. ' 6.14. IT WILL ALSO BE WORTHWHILE TO CONSIDER THE NA TURE OF BURDEN OF PROOF ON THE AO FOR PROVING A FACT OR CIRCUMSTANCE IN THE INCOME TAX PROCEEDINGS. THE QUESTIONS RAISED ABOUT THE TAX LIABILITY BY THE AO ARE TO BE ANSWERED BY THE ASSESSEE BY FURNISHING REASONABLE AND PLAUSIBLE EXP LANATIONS. IF ASSESSEE IS NOT FORTHCOMING WITH PROPER OR COMPLETE FACTS OR HI S STATEMENT OR EXPLANATION ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 14 IS CONTRADICTORY, DRAWING OF SUITABLE INFERENCES AN D ESTIMATION OF FACTS IS INEVITABLE. COURTS GENERALLY WILL NOT INTERFERE WIT H SUCH ESTIMATE OF FACTS, UNLESS THE INFERENCES OR ESTIMATES ARE PERVERSE OR CAPRICIOUS. 6.15. THE ASSESSEE'S TECHNICAL CONTENTIONS ABOUT AD MISSIBILITY AND RELIANCE ON MATERIAL AVAILABLE ON THE AO'S RECORD ARE IN THE NATURE OF CONTENTIONS CHALLENGING CRIMINAL OR CIVIL LIABILITIES IN A COUR T OF LAW. WE ARE DEALING WITH A PROCESS OF ADJUDICATION OF ASSESSES TAX LIABILITY I .E. ASSESSMENT UNDER INCOME TAX ACT RATHER THAN CONDUCTING CRIMINAL OR CIVIL CO URT PROCEEDINGS. AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF S.S. GADGI L (SUPRA) NO ' LIS ' IS INVOLVED IN ADJUDICATION OF TAX LIABILITY. THE ASSE SSEE'S CONTENTION THAT THERE WAS NO NEW MATERIAL BEFORE THE AD AFTER THE CIT(A)' S SETTING ASIDE ORDER CANNOT BE ACCEPTED. NEW INFORMATION AND MATERIAL DI D INDEED COME ON RECORD. IN OUR VIEW, IN A SENSITIVE MATTER LIKE THI S, EVEN A SINGLE CLUE OR REVELATION CAN BE OF GREAT IMPORTANCE. TO REVERSE T HE ORDER OF THE AO ON THIS TECHNICAL PLEA WILL AMOUNT TO TAKING A LOPSIDED VIE W OF THE PROCEEDINGS. BESIDES, THE JPC HAS UNDERLINED THE IMPORTANCE OF R EPORTS OF INVESTIGATION AGENCIES LIKE CBI, DRI, ED WHOSE WERE IN THE OFFING , AS THE RELEVANT INVESTIGATIONS WERE IN PROCESS. IN VIEW OF THESE OB SERVATIONS, WE DO NOT ACCEDE TO THE ASSESSEE'S PLEAS IN THIS BEHALF. THE ASSESSEE'S CONTENTIONS AND OBJECTIONS IN THIS BEHALF THAT THE MATERIAL AVA ILABLE ON RECORD WAS NOT ADMISSIBLE AS EVIDENCE AND THAT IT CANNOT BE RELIED ON BY THE AO, ARE DEVOID OF ANY MERIT AND ARE REJECTED OUTRIGHT ' IN VIEW OF THE ABOVE DISCUSSION, I FIND NO INFIRMIT Y IN THE ORDERS OF THE LD. AO, CONFIRM THE SAME. GROUNDS 1 TO 3 TAKEN BY THE APPELLANT STA ND DISMISSED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THE ASSESSEES PAPER BOOK COMPRISING OF ALL DETAILS OF ITS LTCG, COPY OF ITS BILL DATED 25.02.2012 IN CONNECTION WITH PURCHASE OF SHA RES OF M/S SURABHI CHEMICALS & INVESTMENTS LTD. AND PANCHSHUL MARKETIN G LTD, BANK STATEMENT. THE SAID LATTER ENTITIES AMALGAMATED REGARDING MER GER WITH M/S KAILASH AUTO FINANCE, CONTRACT NOTES IN RESPECT OF SALE OF SHARE OF M/S SURABHI CHEMICALS & INVESTMENTS LTD. SIMILAR CONTRACT NOTES REGARDING M/S KAILASH AUTO SHARES SOLD, BANK STATEMENT REFLECTING PAYMENT RECEIPTS AL ONGWITH CORRESPONDING DEMAT STATEMENTS STAND PERUSED. MR. CHOUDHURY RELIE S ON HON'BLE APEX COURTS DECISION IN SUMATI DAYAL VS. CIT (1995) 80 TAXMANN 89/ 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) THAT THE ASSESSEES EXPLANATION IN THE CORRESPONDING BACKDRO P OF FACTS PIN-POINTING SUSPICIOUS CIRCUMSTANCES HAS BEEN RIGHTLY REJECTED IN BOTH THE LOWER PROCEEDINGS. IT IS VEHEMENTLY ARGUED THAT ASSESSEE HAS TAKEN LTCG ENTRY IN COLLUSION WITH DUBIOUS ENTRY OPERATORS. WE FIND NO MERIT IN ANY OF THESE ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 15 ARGUMENTS. THE FACT THAT REMAINS RIGHT FROM ASSESSM ENT TILL DATE IS THAT NO SUCH ENTRY OPERATOR HAS NAMED THE ASSESSEE IN ANY O F HIS SUCH STATEMENT NOR THE REVENUE HAS FILED ANY SUCH EVIDENCE TO THIS EFF ECT. WE FIND IN THESE FACTS AND CIRCUMSTANCES THAT THIS TRIBUNALS ORDER IN ITA NO.1650/KOL/2018 ADITYA VIKRAM SUREKA (HUF) VS. ITO DECIDED ON 28.11.2018 H AS REJECTED REVENUES SIMILAR ARGUMENTS FOR LACK OF ANY COGENT EVIDENCE A S FOLLOWS:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT EMERGES AT THE OUTSET THAT BOTH THE LOWER AUTHORITIES HAVE ADOPTED IDENTICAL LINE OF RE ASONING IN TREATING THE SALE CONSIDERATION RECEIVED ON TRANSFER OF SHARES IN AFO RESAID COMPANIES TO BE BOGUS THEREBY TREATING THE SAME AS UNEXPLAINED CASH CREDI TS U/S 68 OF THE ACT. THE LD DR DREW OUR ATTENTION TO A VOLUMINOUS EXERCISE UNDE RTAKEN BY THE LD AO INVOLVING A LONG DRAWN PROCESS OF STOCK MARKET PRIC ES RIGGING IN COLLUSION WITH THE VARIOUS ENTRY OPERATORS. THE LD DR ARGUED THAT THE ASSESSEE HAD MADE INVESTMENT IN SHARES OF THE AFORESAID COMPANIES NOT HAVING ANY SOUND FINANCIAL POSITION OR BUSINESS ACTIVITY SO AS TO JUSTIFY THE LONG TERM CAPITAL GAINS TO THIS EXTENT. THE CASES OF SUMATI DAYAL VS. CIT 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR (SC) WERE QUOTED IN SUPPORT TO PLEAD THAT BOTH THE LOWER AUTHORITIES HAVE MADE IT CLEAR IN TH EIR RESPECTIVE ORDER(S) ABOUT THE ASSESSEE HAVING ACTED IN COLLUSION WITH VARIOUS ENTRY OPERATORS FOR THE PURPOSE OF BOGUS LONG TERM CAPITAL GAINS IN ISSUE. THERE IS NO DISPUTE THAT ASSESSEE HAVING DERIVED THE LONG TERM CAPITAL GAINS (LTCG IN SHORT) ON TRANSFER OF SHARES HELD IN NIKKI GLOBAL FINANCE LTD AND S R K INDUSTRIES LTD. THE LD DR DID NOT CONTROVERT THE FINDINGS GIVEN BY THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN ASSESSEES FAVOUR IN T HE CASE OF SMT MADHU KILLA VS ACIT IN ITA NO. 834/KOL/2018 FOR ASST YEAR 2014-15 DATED 2.11.2018 IN RESPECT OF SHARES OF NIKKI GLOBAL FINANCE LTD, WHER EIN IT WAS HELD AS UNDER:- 3. BEFORE US THE LD. AR SUBMITTED THAT THE ADDITIO N MADE BY THE AO AND UPHELD BY THE LD. CIT(A) WAS BASED ON PRESUMPTION AND SUSPICION ALONE AND, THEREFORE, PERVERSE IN THE EYES OF LAW. IN T HE COURSE OF HEARING OF THE CASE, THE LD. AR REFERRED TO VARIOUS DOCUMENTARY EV IDENCES FURNISHED IN THE PAPER BOOK IN SUPPORT OF THE CLAIM OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELATING TO LTCG ON SALE OF SHARES . THE LD. AR DREW OUR ATTENTION TO THE ORDER OF THE AO WHEREIN THE AO HAS ERRONEOUSLY RECORDED AT PARA 3.1 THAT THE ASSESSEE HAD PURCHASED THE SHARE S OF M/S. NFGL OFF MARKET (NOT THROUGH ESTABLISHED STOCK EXCHANGE) WHEREAS TH E ASSESSEE HAD PURCHASED THE SHARES OF M/S. NFGL THROUGH M/S. M. PRASAD & CO . LTD. WHICH IS A RECOGNIZED STOCK BROKER OF BOMBAY STOCK EXCHANGE (B SE), THROUGH WHOM THE ASSESSEE HAD MADE SEVERAL INVESTMENTS IN VARIOUS S CRIPS/SHARES AND DREW OUR ATTENTION TO PAGE 5 OF PAPER BOOK WHEREIN THE DETAI LS OF INVESTMENT MADE BY THE ASSESSEE FOR THE PREVIOUS AY 2013-14 IS GIVEN W HICH SHOWS THAT ASSESSEE HAS DEALT WITH 30 NOS. OF DIFFERENT SHARES OF COMPA NIES INCLUDING RELIANCE, INFOSYS, L & T ETC. AND IT WAS THUS CONTENDED THAT THIS TRANSACTION WITH M/S. NFGL WAS NOT THE SINGLE INVESTMENT WHICH ASSESSEE C ARRIED OUT THROUGH THIS BROKER. THUS, ACCORDING TO LD. AR, THE AO ERRED IN FINDING THAT THE ASSESSEE HAD PURCHASED SHARES OF M/S. NFGL IN OFF MARKET AND NOT THROUGH ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 16 ESTABLISHED STOCK EXCHANGE. THE LD. AR DREW OUR ATT ENTION TO PAGE NO. 6 OF THE PAPER BOOK WHEREIN WE NOTE THAT THE ASSESSEE HA D PURCHASED ON 13.06.2012, 25000 SHARES AT COST PRICE OF RS.128.25 OF M/S. NFGL WHEREIN THE ASSESSEE HAD REMITTED STT OF RS.4007.81 AND THA T THE TRANSACTION HAS HAPPENED THROUGH M/S. M. PRASAD & CO. LTD. WHICH IS A REGISTERED MEMBER OF THE BOMBAY STOCK EXCHANGE. THE LD. AR DREW OUR ATTENTION TO PAGE 18 OF THE PAPER BOOK WHICH SHOWS THAT THE AMOUNT IN QUEST ION I.E. RS.32,21,216/- HAS BEEN TRANSFERRED ON 14.06.2012 FROM ASSESSEES ACCOUNT TO THE REGISTERED BROKERS ACCOUNT I.E. OF M/S. M. PRASAD & CO.. THE LD. AR DREW OUR ATTENTION TO PAGE 26 OF THE PAPER BOOK WHICH IS THE DE MAT TRANSACTION STATEMENT WHEREIN WE NOTE THAT ON 15 TH JUNE, 2012 THIS 25000 SHARES HAVE BEEN DEPOSITED OF M/S. NFGL BY INTER DEPOSITORY TRA NSACTION (CBS). THUS, WE FIND THAT THE AO ERRED IN RECORDING A FINDING OF FACT THAT THE ASSESSEE HAD MADE THE PURCHASE OF M/S. NFGL NOT THROUGH STOCK EX CHANGE BUT IT WAS AN OFF MARKET TRANSACTION. WE FIND THAT THE ASSESSEE HAD PURCHASED THE SHARES OF M/S. NFGL THROUGH REGISTERED BROKER M/S. M. PRASAD & CO. WHICH WAS A REGISTERED STOCK BROKER OF THE BOMBAY STOCK EXCHANG E AND ON 13.06.2012 ASSESSEE PURCHASED 25000 SHARES AT RS.128.25 PER SH ARE ON WHICH STT WAS PAID AND THE TOTAL TRANSACTION OF RS.32,21,213.10 W AS PAID THROUGH ACCOUNT PAYEE CHEQUE TO THE REGISTERED BROKER AND THE SHARE S WERE DEPOSITED IN THE DEMAT ACCOUNT (D. P. STOCK HLDG CORP OF INDIA LTD.) THE FOLLOWING OTHER DOCUMENTS WERE ALSO FILED BEFORE THE AUTHORITIES BE LOW: I) COPY OF BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2 013 (FY 2012-13 CORRESPONDING TO AY 2013-14) ALONG WITH DET AILS OF INVESTMENTS (PAGE NOS. 4 AND 5 OF PAPER BOOK) WHERE IN 25000 SHARES OF M/S. NFGL OF VALUE OF RS.32,21,269.18 IS REFLECTED AND WE NOTE THAT THE ASSESSEE HAD MADE INVESTMENT I N 30 NO. OF DIFFERENT SHARES INCLUDING THAT OF L&T, RELIANCE, T ISCO, INFOSYS, ICICI, INFOTECH ETC. AND HAD INVESTMENTS A LTOGETHER OF RS.87,44,010.73 WHICH HAS BEEN DULY REFLECTED IN PA GE 4 OF THE PAPER BOOK WHICH IS THE BALANCE SHEET AS ON 31.03.2 013 WHEREIN THE SHARE INVESTMENT OF RS.87,44,010.73 HAS DULY BEEN REFLECTED AND IS TALLYING. II) CONTRACT NOTE FOR PURCHASE OF SHARES OF M/S. NF GL IS FOUND PLACED AT PAGE 6 OF THE PAPER BOOK. III) COPY OF THE BANK STATEMENT HIGHLIGHTED THE PA YMENT OF PURCHASE OF SHARES THROUGH BANK (PAPER BOOK PAGE 18 & 19). IV) COPY OF DE MAT HOLDING STATEMENT AND TRANSACTIO N STATEMENT HIGHLIGHTING THE MOVEMENT OF SHARES FROM PAGE 25 TO 33 OF THE PAPER BOOK. V) COPY OF LEDGER OF ASSESSEE IN THE BOOKS OF THE S HARE BROKER PAGES 34 TO 36 OF THE PAPER BOOK. FOLLOWING DOCUMENTS WERE FILED BEFORE THE AUTHORITI ES BELOW IN SUPPORT OF THE SALE OF THE SHARES: I) COPY OF CONTRACT NOTE FOR SALE OF SHARES OF M/S. NF GL PAGE 7 TO 17 OF THE PAPER BOOK. II) COPY OF BANK STATEMENT HIGHLIGHTING THE RECEIPT OF SALE CONSIDERATION PAGES 20TO 23 OF PAPER BOOK. III) COPY OF DE MAT HOLDING STATEMENT AND TRANSACTION OF THE STATEMENT WHICH HIGHLIGHTING THE MOVEMENT OF SHARES PAGES 24 TO 33 OF THE PAPER BOOK. ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 17 4. IT WAS ALSO POINTED OUT BY THE LD. AR THAT PURCH ASE OF SHARES OF M/S. NFGL IN FY 2012-13 WAS DULY RECORDED IN THE BALANCE SHEET A ND THE RETURN WAS PROCESSED BY THE DEPARTMENT U/S. 143(1) OF THE ACT THEREBY THE D EPARTMENT HAS ACCEPTED THE PURCHASE OF SHARES OF M/S. NFGL, HOWEVER, WHEN SALE S OF THE SAME SCRIPS HAPPENED IT WAS NOT ACCEPTED BY THE AO WHICH ACTION OF THE A O, ACCORDING TO LD. AR, WAS UNJUSTIFIED AND NEED TO BE SET RIGHT. THE LD. AR F URTHER POINTED OUT THAT THE AO IN HIS EAGERNESS TO SOMEHOW HOLD THAT TRANSACTION OF M/S. NFGL BOGUS HAS ERRONEOUSLY MADE A FACTUAL FINDING THAT PURCHASES OF THESE SHAR ES HAPPENED OFF MARKET WHEN THE FACT WAS THAT THE PURCHASE OF M/S. NFGL SHARES WERE MADE THROUGH BOMBAY STOCK EXCHANGE. THE LD. AR POINTED OUT THAT THE EVIDENCE AND DOCUMENTS FURNISHED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW WERE NEITHER FOUND TO BE FALSE NOR FABRICATED. THE LD. AR SUBMITTED THAT THE AO DOUBTED THE GENUIN ENESS OF THE SALE TRANSACTION ON THE BASIS OF SOME PURPORTED ORDERS OF THE SEBI AND/ OR THE INVESTIGATION WING. HOWEVER, THE AO HAS MERELY MENTIONED THE DATE OF LE TTER ISSUED BY THE DIRECTOR OF INVESTIGATION. SAVE AND EXCEPT THE DATE OF THE LET TER, ACCORDING TO LD. AR, THERE IS NOTHING BROUGHT ON RECORD BY THE AO AS TO HOW THE I NVESTIGATION REPORT CONCERNED THE ASSESSEE AND/OR THE SHARES SOLD BY THE ASSESSEE . THE LD AR SUBMITTED THAT THE AO ON PAGES 6-9 OF THE ASSESSMENT ORDER HAD MERELY STA TED THAT THE INVESTIGATION WING AND SEBI CONDUCTED SOME INQUIRIES IN RESPECT OF SOM E OTHER COMPANIES AND AS PER THE REPORT PREPARED BY THEM, CERTAIN PATTERNS AND F EATURES WERE IDENTIFIED BY THEM AND AS PER THE AO SUCH PATTERNS AND FEATURES WERE E MERGING IN THE CASE RELATED TO THE SHARES OF THE COMPANY (I.E. M/S. NFGL) WHICH TH E ASSESSEE DEALT WITH. HOWEVER SAVE AND EXCEPT MAKING A PASSING REMARK OR MERE REF ERENCE TO SO CALLED PATTERNS, THERE IS NOTHING IN THE ASSESSMENT ORDER FROM WHICH IT CAN BE FOUND THAT THE ASSESSEE OR THE COMPANY (M/S. NFGL) OR THE BROKERS WERE ADVE RSELY NAMED/COMMENTED UPON IN THE REPORT OF INVESTIGATION. ACCORDING TO LD AR, THE AO IDENTIFIED 10-11 ADVERSE FEATURES ON PAGE 6-7 OF THE ASSESSMENT ORDER, HOWEV ER HE WONDERED AS TO HOW THESE FEATURES WERE RELATING TO THE COMPANY (M/S. NFGL) I N THE CASE OF ASSESSEE WAS NOT AT ALL DEMONSTRATED. THUS ACCORDING TO LD AR, THERE WAS NO MATERIAL WHATSOEVER TO HOLD THAT THE COMPANY (M/S. NFGL) DEALT BY THE ASSE SSEE WAS HAVING SUCH PATTERN OR FEATURES. IT WAS SUBMITTED THAT THE AO DISALLOWED T HE ASSESSEES CLAIM OF LTCG ON SALE OF SHARES ON SURMISES, SUSPICION AND PRESUMPTI ONS ALONE. IT WAS SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT BROUGHT ANY MATERIAL OR EVIDENCE ON RECORD TO FALSIFY THE CLAIM OF THE ASSESSEE OR TO HOLD THAT THE SHARE TRANSACTIONS WERE BOGUS. 5. THE LD AR DREW OUR ATTENTION TO THE FACT THAT TH E PURCHASE AND SALE OF SHARES WAS MADE ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE; THEREFORE ACCORDING TO LD AR, THE ASSESSEE DID NOT KNOW THE NAMES OF THE BUYERS AND H AS NO CONNECTION AND/OR RELATIONS WITH ANY SUCH PERSONS. THE TRANSACTIONS OF SALE OF SHARES WERE ONLINE TRADING SYSTEM THROUGH HIS BROKER FROM WHOM HE RECEIVED THE SALE C ONSIDERATION. THE BROKER ALSO RECEIVED PAYMENTS FOR ALL HIS TRANSACTIONS FROM STO CK EXCHANGE. THE SELLER AND THE BUYER CANNOT KNOW THE NAMES OF EACH OTHER AS WELL A S THAT OF THEIR RESPECTIVE BROKERS, WHO WERE INVOLVED IN THE TRADING TRANSACTIONS IN TH E SECONDARY PLATFORM. IN SUCH A SITUATION ACCORDING TO LD AR, IT CANNOT BE PRESUMED THAT THERE COULD BE ANY TRANSFER OF CASH BETWEEN THE BUYERS AND SELLERS TO CONVERT THEI R UNACCOUNTED MONEY OF THE BENEFICIARIES AS ALLEGED BY THE AO. THE LD AR REFER RED TO THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LAVANYA LA ND PVT. LTD. [2017] 83 TAXMANN.COM 161 (BOM) TO CONTEND THAT THERE WAS NO EVIDENCE WHATSOEVER TO ALLEGE THAT MONEY CHANGED HANDS BETWEEN THE ASSESSEE AND T HE BROKER OR ANY OTHER PERSON INCLUDING THE ALLEGED EXIT PROVIDER WHATSOEVER TO C ONVERT UNACCOUNTED MONEY FOR ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 18 GETTING BENEFIT OF LTCG AS ALLEGED. IN THE SAID CAS E, THE HONBLE HIGH COURT AT PARA 21 HELD THAT IN ABSENCE OF ANY MATERIAL TO SHOW THA T HUGE CASH WAS TRANSFERRED FROM ONE SIDE TO ANOTHER, ADDITION CANNOT BE SUSTAINED. SIMILAR VIEW, ACCORDING TO LD. AR, WAS TAKEN IN THE FOLLOWING CASES:- (I) BAIJNATH AGARWALLA VS. ACIT [2010] 40 SOT 475 (AGRA THIRD MEMBER) (II) GANESHMULL BIIJAY SINGH BAID HUF VS. DCIT ITA NO. 544/KOL/13 DATED 4.12.2015 (KOLKATA TRIBUNAL) (III) MALTI GHANSHYAMBHAI PATODIA VS. ITO ITA NO. 3400/ AHD/2015 (AHMEDABAD TRIBUNAL) (IV) PRATIK SURYAKANT SHAH VS. ITO [ 2017] 77 TAXMANN.C OM 260 (AHMEDABAD TRIBUNAL) (V) PADDUCHARI JEEVAN PRASHANT VS. ITO ITA NO. 4 52/HYD/2015 (HYDERABAD TRIBUNAL) (VI) ANIL NAND KISHORE GOYAL VS.ACIT ITA NOS. 1256/PN/ 2012 (PUNE TRIBUNAL) (VII) CIT VS. JAMNA DEVI AGRAWAL [2012] 20 TAXMANN.COM 529 (BOM HC) 6. THE LD AR SUBMITTED THAT ALL THE OBSERVATIONS, CONCLUSIONS AND FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMISES AND HE ARSAY. ACCORDING TO LD AR, IT IS TRITE LAW THAT THE SUSPICION HOWSOEVER STRONG, CANNOT PAR TAKE THE CHARACTER OF LEGAL EVIDENCE. REFERENCE WAS MADE TO THE JUDGEMENT OF HONBLE SUPR EME COURT IN THE CASE OF LALCHAND BHAGAT AMBICA RAM VS. CIT (1959) 37 ITR 288 (SC, , UMACHARAN SHAW 37 ITR 271 AND OMAR SALAY MOHAMED SAIT 37 ITR 151. THE LD AR SUBMI TTED THAT THE ENTIRE CASE OF THE REVENUE IS BASED UPON THE PRESUMPTION THAT THE ASSE SSEE HAS PLOUGHED BACK HIS OWN UNACCOUNTED MONEY IN THE FORM OF BOGUS LTCG. HOWEVE R, THIS PRESUMPTION OR SUSPICION HOWSOEVER STRONG IT MAY BE, BUT NEEDS TO BE CORROBO RATED BY SOME EVIDENCE TO ESTABLISH A LINK THAT THE ASSESSEE HAD BROUGHT BACK HIS UNACCOU NTED INCOME IN THE FORM OF LTCG. THE LD AR REFERRED TO THE JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTRIES LTD. VS. ACIT [2017] 164 ITD 1 (MUMBAI-T RIB.)(SB) THE TRIBUNAL OBSERVED AS UNDER: 46. ......... ULTIMATELY THE ENTIRE CASE OF REVENUE HINGES UPON THE PRESUMPTION THAT ASSESSEE IS BOUND TO HAVE SOME LARGE SHARE IN SO CA LLED SECRET MONEY IN THE FORM OF PREMIUM AND ITS CIRCULATION. HOWEVER, THIS PRESUMPT ION OR SUSPICION HOW STRONG IT MAY APPEAR TO BE TRUE BUT NEEDS TO BE CORROBORATED BY S OME EVIDENCE TO ESTABLISH A LINK THAT GTC ACTUALLY HAD SOME KIND OF A SHARE IN SUCH SECRE T MONEY. IT IS QUITE A TRITE LAW THAT SUSPICION HOWSOEVER STRONG MAY BE BUT CANNOT BE THE BASIS OF ADDITION EXCEPT FOR SOME MATERIAL EVIDENCE ON RECORD. THE THEORY OF PREPOND ERANCE OF PROBABILITY IS APPLIED TO WEIGH THE EVIDENCES OF EITHER SIDE AND DRAW A CONCL USION IN FAVOUR OF A PARTY WHICH HAS MORE FAVOURABLE FACTORS IN HIS SIDE. THE CONCLUSION S HAVE TO BE DRAWN ON THE BASIS OF CERTAIN ADMITTED FACTS AND MATERIALS AND NOT ON THE BASIS OF PRESUMPTIONS OF FACTS THAT MIGHT GO AGAINST THE ASSESSEE. ONCE NOTHING HAS BEE N PROVED AGAINST THE ASSESSEE WITH AID OF ANY DIRECT MATERIAL ESPECIALLY WHEN VARIOUS ROUNDS OF INVESTIGATIONS HAVE BEEN CARRIED OUT, THEN NOTHING CAN BE IMPLICATED AGAINST THE ASSESSEE . 7. THE LD AR SUBMITTED THAT THERE IS NO DIRECT EVID ENCE AGAINST THE ASSESSEE BROUGHT ON RECORD BY AO TO HOLD THAT THE ASSESSEE I NTRODUCED HIS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LTCG. THE LD AR SUBMITTED THA T ALTHOUGH VARIOUS INVESTIGATIONS WERE CARRIED OUT BY DIFFERENT AGENCI ES, THERE IS NO EVIDENCE AGAINST THE ASSESSEE AND/OR THE BROKERS AND/OR THE COMPANIES IN WHICH THE ASSESSEE DEALT WITH TO ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 19 HOLD THAT THE ASSESSEE WAS A BENEFICIARY TO THE MOD US OPERANDI ADOPTED BY DIFFERENT ENTITIES / BROKERS / ENTRY OPERATORS. THE LD AR S UBMITTED THAT, IN VIEW OF THE AFORESAID JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL, VA RIOUS CASE LAWS RELIED ON BY THE AO AGAINST THE ASSESSEE ARE IRRELEVANT IN AS MUCH A S THE SAID ORDERS ARE BASED ON CONCLUSIONS DRAWN ON THE BASIS OF CIRCUMSTANTIAL EV IDENCES ONLY WITHOUT ANY MATERIAL EVIDENCE ON RECORD AND CANNOT BE APPLIED IN THE CAS E IN HAND BECAUSE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF BY PRODUCING RELEVAN T LEGALLY ADMISSIBLE EVIDENCE, WHICH THE AO COULD NOT FIND FAULT WITH. 8. THE LD AR VEHEMENTLY SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE CLAIM OF THE ASSESSEE THAT IT EAR NED LTCG ON TRANSACTIONS OF HIS INVESTMENT IN SHARES. THE PURCHASE OF SHARES HAD BE EN ACCEPTED BY THE AO IN THE YEAR OF ITS ACQUISITION AND THEREAFTER UNTIL THE SAME WE RE SOLD. THE TRANSACTIONS WERE ALL THROUGH ACCOUNT PAYEE CHEQUES AND REFLECTED IN THE BOOKS OF ACCOUNTS. THE PURCHASE AND SALE OF SHARES AND THE SALE OF SHARES WERE ALSO REFLECTED IN DEMAT ACCOUNT STATEMENTS. THE SALE OF SHARES SUFFERED STT, BROKER AGE ETC. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT T HE TRANSACTIONS WERE BOGUS. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS OF JURISDICT IONAL HIGH COURT:- (I) M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDENCES PRODUCED BY T HE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO AS TO REDUC E THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD AO BU T HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WERE AT T HE PREVAILING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTI ATED. (II) CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITED [2 013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY F INDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER H ELD THAT IN ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANSACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTE D TO WITH ULTERIOR MOTIVE. (III) CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERVICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCO UNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. (IV) CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE D ECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLE GED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON THE BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUBT THE GENUINENESS OF THE DOCUMENTS ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 20 SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED B Y THE REVENUE WAS DISMISSED. (V) CIT V. ANDAMAN TIMBERS INDUSTRIES LIMITED [ITA NO. 721 OF 2008] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRMED THE DECISION OF THIS TRIBUNAL WHEREIN THE LOSS SUFFERED BY THE ASSESSEE WAS ALLOWED SINCE THE AO FAILED TO BRING ON RECORD ANY EVIDENCE TO SUGGEST THAT THE SALE OF SHARES BY THE ASSESSEE WERE NOT GENUINE. (VI) CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (CA L HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE I NFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THEREAT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUM ENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DEMAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIV ED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARIL Y DISMISSED BY HIGH COURT. 9. THE LD AR SUBMITTED BEFORE US THAT WHERE THE PURCHASE AND SALE TRANSACTIONS ARE SUPPORTED AND EVIDENCED BY BILLS, CONTRACT NOTE S, DEMAT STATEMENTS AND BANK STATEMENTS ETC., AND WHEN THE TRANSACTIONS OF PURCH ASE OF SHARES WERE ACCEPTED BY THE LD AO IN EARLIER YEARS, THE SAME COULD NOT BE TREATED AS BOGUS SIMPLY ON THE BASIS OF SOME REPORTS OF THE INVESTIGATION WING AND/OR THE ORDERS OF SEBI AND/OR THE STATEMENTS OF THIRD PARTIES. IN SUPPORT OF THE AFORESAID SUBMISSIONS, T HE LD AR, IN ADDITION TO THE AFORESAID JUDGEMENTS, HAS REFERRED TO AND RELIED ON THE FOLLO WING CASES:- (I) BAIJNATH AGARWAL VS. ACIT [2010] 40 SOT 475 (AGRA (TM) (II) ITO VS. BIBI RANI BANSAL [2011] 44 SOT 500 (AGRA) (TM) (III) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGRA/2009 (AGRA ITAT) (IV) ACIT VS. AMITA AGARWAL & OTHERS ITA NOS. 247/(KOL )/ OF 2011 (KOL ITAT) (V) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VI) SURYA PRAKASH TOSHNIWAL VS. ITO ITA NO. 1213/KOL/ 2016 (KOL ITAT) (VII) SUNITA JAIN VS. ITO ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (VIII) MS. FARRAH MARKER VS. ITO ITA NO. 3801/MUM/2011 ( MUMBAI ITAT) (IX) ANIL NANDKISHORE GOYAL VS. ACIT ITA NOS. 1256/PN/ 2012 (PUNE ITAT) (X) CIT VS. SUDEEP GOENKA [2013] 29 TAXMANN.COM 402 ( ALLAHABAD HC) (XI) CIT VS. UDIT NARAIN AGARWAL [2013] 29 TAXMANN.COM 76 (ALLAHABAD HC) (XII) CIT VS. JAMNADEVI AGARWAL [2012] 20 TAXMANN.COM 529 (BOMBAY HC) (XIII) CIT VS. HIMANI M. VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) (XIV) CIT VS. MAHESHCHANDRA G. VAKIL [2013] 40 TAXMANN. COM 326 (GUJARAT HC) (XV) CIT VS. SUMITRA DEVI [2014] 49 TAXMANN.COM 37 (RAJA STHAN HC) (XVI) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (XVII) MEENA DEVI GUPTA & OTHERS VS. ACIT ITA NOS. 4512 & 4513/AHD/2007 (AHMEDABAD ITAT) (XVIII) MANISH KUMAR BAID ITA 1236/KOL/2017 (KOLKATA ITAT) ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 21 (XIX) MAHENDRA KUMAR BAID ITA 1237/KOL/2017 (KOLKATA ITAT ) 10. THE LD AR FURTHER SUBMITTED BEFORE US THAT ONCE THE ASSESSEE HAS FURNISHED ALL EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRAN SACTIONS, THE ONUS TO DISPROVE THE SAME IS ON REVENUE. HE REFERRED TO THE JUDGEMENT OF HON BLE SUPREME COURT IN THE CASE OF KRISHNANAND AGNIHOTRI VS. THE STATE OF MADHYA PRADE SH [1977] 1 SCC 816 (SC). IN THIS CASE THE HONBLE APEX COURT HELD THAT THE BURDEN OF SHOWING THAT A PARTICULAR TRANSACTION IS BENAMI AND THE APPELLANT OWNER IS NOT THE REAL O WNER ALWAYS RESTS ON THE PERSON ASSERTING IT TO BE SO AND THE BURDEN HAS TO BE STRI CTLY DISCHARGED BY ADDUCING EVIDENCE OF A DEFINITE CHARACTER WHICH WOULD DIRECTLY PROVE THE FACT OF BENAMI OR ESTABLISH CIRCUMSTANCES UNERRINGLY AND REASONABLY RAISING INF ERENCE OF THAT FACT. THE HONBLE APEX COURT FURTHER HELD THAT IT IS NOT ENOUGH TO SHOW CI RCUMSTANCES WHICH MIGHT CREATE SUSPICION BECAUSE THE COURT CANNOT DECIDE ON THE BA SIS OF SUSPICION. IT HAS TO ACT ON LEGAL GROUNDS ESTABLISHED BY EVIDENCE. THE LD AR SUBMITTE D THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGMENTS WHILE DECIDING THE ISSUE RE LATING TO EXEMPTION CLAIMED BY THE ASSESSEE ON LTCG ON ALLEGED PENNY SOCKS. (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 ( AGRA ITAT) (II) ACIT VS. J. C. AGARWAL HUF ITYA NO. 32/AGR/2007 ( AGRA ITAT) 11. THE LD AR FURTHER SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE ON THE GROUND OF ABNORMAL PRIC E RISE OF THE SHARES AND ALLEGING PRICE RIGGING. IT WAS SUBMITTED THAT THERE IS NO ALLEGATI ON IN ORDERS OF SEBI AND/OR THE ENQUIRY REPORT OF THE INVESTIGATION WING TO THE EFFECT THAT THE ASSESSEE, THE COMPANIES DEALT IN AND/OR HIS BROKER WAS A PARTY TO THE PRICE RIGGING OR MANIPULATION OF PRICE IN BSE. THE LD AR REFERRED TO THE FOLLOWING JUDGMENTS IN SUPPORT O F THIS CONTENTION WHEREIN UNDER SIMILAR FACTS OF THE CASE IT WAS HELD THAT THE AO WAS NOT J USTIFIED IN REFUSING TO ALLOW THE BENEFIT UNDER SECTION 10(38) OF THE ACT AND TO ASSESS THE S ALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT :- (I) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 (AGRA ITAT) (II) ACIT VS. AMITA AGARWAL & OTHERS - ITA NOS. 247/(KO L)/ OF 2011 (KOL ITAT) (III) LALIT MOHAN JALAN (HUF) VS. ACIT ITA NO. 693/KOL /2009 (KOL ITAT) (IV) MUKESH R. MAROLIA VS. ADDL. CIT [2006] 6 SOT 247 (MUM) 12. THE LD AR ALSO SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(38) OF THE ACT BY CONCLUDING THAT THE TRANSACTIONS OF THE ASSESSEE RESULTING IN LTCG ON SALE OF SHARES WE RE BOGUS RELYING ON THE STATEMENTS OF VARIOUS UNKNOWN PERSONS RECORDED BY INVESTIGATION W ING WHEREIN THESE PERSONS ACCEPTED TO HAVE PROVIDED ACCOMMODATION ENTRIES OF VARIOUS N ATURES INCLUDING LTCG TO DIFFERENT PERSONS. THE LD AR SUBMITTED THAT IN THE STATEMENT OF THIRD PARTIES, THE NAME OF THE ASSESSEE WAS NOT IMPLICATED. EVEN OTHERWISE, NO ADV ERSE INFERENCE COULD BE TAKEN AGAINST THE ASSESSEE ON THE BASIS OF UNTESTED STATEMENTS WI THOUT ALLOWING OPPORTUNITY OF CROSS- EXAMINATION. THE LD AR REFERRED TO AND RELIED ON TH E FOLLOWING JUDGEMENTS IN SUPPORT OF THE AFORESAID SUBMISSIONS:- (I) ANDMAN TIMBER INDUSTRIES VS. CCE [2015] 62 TAXMAN N.COM 3 (SC) (II) ITO VS. ASHOK KUMAR BANSAL ITA NO. 289/AGR/2009 (AGRA ITAT) (III) ACIT VS. AMITA AGARWAL & OTHERS ITA NO. 247/(KOL) OF 2011 (KOL ITAT) (IV) ITO VS. BIJAYA GANGULY - ITA NOS. 624 & 625/KOL/20 11 (KOL ITAT) ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 22 (V) GANESHMULL BIJAY SINGH BAID HUF VS. DCIT ITA NOS. 544/KOL/2013 (KOLKATA ITAT) (VI) RITA DEVI & OTHERS VS. DCIT IT(SS))A NOS. 22-26/K OL/2P11 (KOL ITAT) (VII) MALTI GHANSHYAMBHAI PATADIA VS. ITO - ITA NO.3400/ AHD/2015 (AHMEDABAD ITAT) (VIII) PRATIK SURYAKANT SHAH VS. ITO [2017] 77 TAXMANN.C OM 260 (AHMEDABAD ITAT) (IX) SUNITA JAIN VS. ITO - ITA NO. 201 & 502/AHD/2016 (A HMEDABAD ITAT) (X) ATUL KUMAR KHANDELWAL VS. DCIT ITA NO. 874/DEL/20 16 (DELHI ITAT) (XI) FARAH MARKER VS. ITO ITA NO. 3801/MUM/2011 (MUMBA I ITAT) 13. THE LD AR ALSO SUBMITTED THAT THE AO WAS NOT J USTIFIED IN INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT TO HOLD THAT TH E SALE PROCEEDS OF SHARES ARE UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE. ACCORDIN G TO HIM, THERE IS NO EVIDENCE ON RECORD TO DISBELIEVE THAT THE ASSESSEE SOLD SHARES THROUGH REGISTERED SHARE AND STOCK BROKER WITH BOMBAY STOCK EXCHANGE. THE ASSESSEE PRODUCED ALL EV IDENCES TO EXPLAIN THE SOURCE OF THE AMOUNTS RECEIVED BY THE ASSESSEE FROM THE BROKER, T HEREFORE ACCORDING TO LD AR, THE AO WAS NOT JUSTIFIED IN ASSESSING THE SALE PROCEEDS OF SHARES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 14. THE LD AR SUBMITTED THAT THERE IS NO DIRECT EVI DENCE AGAINST THE ASSESSEE BROUGHT ON RECORD BY AO TO HOLD THAT THE ASSESSEE INTRODUCED H IS OWN UNACCOUNTED MONEY BY WAY OF BOGUS LTCG. THE LD AR SUBMITTED THAT ALTHOUGH VARIO US INVESTIGATIONS WERE CARRIED OUT BY DIFFERENT AGENCIES, THERE IS NO EVIDENCE AGAINST THE ASSESSEE AND/OR THE BROKERS AND/OR THE COMPANY IN WHICH THE ASSESSEE DEALT WITH TO ADV ERSELY HOLD THAT THE ASSESSEE WAS A BENEFICIARY TO THE MODUS OPERANDI ADOPTED BY DIFFER ENT ENTITIES / BROKERS / ENTRY OPERATORS. THE LD AR SUBMITTED THAT, IN VIEW OF THE AFORESAI D JUDGEMENT OF SPECIAL BENCH OF MUMBAI TRIBUNAL, VARIOUS CASE LAWS RELIED ON BY TH E AO AGAINST THE ASSESSEE ARE IRRELEVANT IN AS MUCH AS THE SAID ORDERS ARE BASED ON CONCLUSIONS DRAWN ON THE BASIS OF CIRCUMSTANTIAL EVIDENCES ONLY WITHOUT ANY MATERIAL EVIDENCE ON RECORD AND CANNOT BE APPLIED IN THE CASE IN HAND BECAUSE ASSESSEE HAS DI SCHARGED THE BURDEN OF PROOF BY PRODUCING RELEVANT LEGALLY ADMISSIBLE EVIDENCE, WHI CH THE AO COULD NOT FIND FAULT WITH. ON THE OTHER HAND, THE LD. DR VEHEMENTLY SUPPORTED THE IMPUGNED ORDER OF LD. CIT(A)/AO AND DOES NOT WANT US TO INTERFERE IN THE IMPUGNED ORDER. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR IN THE ASSESSMENT ORDER AT PARA 3.13 THE AO HAS STATED IN SUB-PARA C THAT THE ASSESSEE PURCHASED SHARES AT RS.865.97 PE R SHARE . IT WAS POINTED OUT BY THE LD. AR THAT THE ASSESSEE HAS PURCHASED SHARE OF M/S. NFLG FOR RS.128.25 PER SHARE WHICH IS REFLECTED IN PAGE 6 OF THE PAPER BOOK WHIC H IS THE CONTRACT NOTE. ACCORDING TO LD. AR THIS IS NOTHING BUT CUT PASTE OF SOME OTHER CASE AND HAS NOTHING TO DO WITH THE ASSESSEES CASE AND IT EXPOSES NON-APPLICATION OF M IND OF THE AO. WE FIND THAT THE AO HAS STATED THAT THE ASSESSEE HAS PURCHASED THE SHAR E AT RS.865 PER SHARE WHEREAS THE ASSESSEE HAD PURCHASED THE SHARES AT RS.128.25, THE REFORE, WE NOTE THAT THE AO ERRED IN MAKING THE ERRONEOUS FINDING OF THE PURCHASE VALUE OF THE SHARES. WE NOTE THAT IN THIS CASE THE ASSESSEE WAS INVESTING IN DIFFERENT SHARES OF THE COMPANIES (30 DIFFERENT SHARES OF COMPANIES ) AS EVIDENT FROM PERUSAL OF PAGE 5 OF PAPER BOOK AND THE PURCHASE AND SALE OF SHARES IN M/S. NFGL IS ONE AMONG THE 30 ODD SHAR ES THE ASSESSEE DEALT WITH AS AN INVESTMENT THROUGH A REGISTERED STOCK BROKER OF BOM BAY STOCK EXCHANGE M. PRASAD & CO. LTD. THE ASSESSEE HAD PURCHASED 25000 SHARES OF M/S. NFGL ON 13.06.2012 AT A COST PRICE OF RS.128.25 PER SHARE AND REMITTED SECU RITY TRANSACTION TAX (STT) OF ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 23 RS.4007.81 AND AT A TOTAL COST PRICE OF RS.32,16,00 0/- (SEE CONTRACT NOTE PLACED AT PAGE 6 OF PAPER BOOK). THUS WE FIND THAT THE AO ERRED IN F INDING THAT THE ASSESSEE HAD MADE THE PURCHASE NOT THROUGH STOCK EXCHANGE BUT IT WAS AN O FF MARKET TRANSACTION. WE FIND THAT THE ASSESSEE HAD PURCHASED THROUGH REGISTERED BROKE R M/S. M. PRASAD & CO. WHO WAS REGISTERED STOCK BROKER OF THE BOMBAY STOCK EXCHANG E AND ON 13.06.2012 ASSESSEE PURCHASED 25000 SHARES AT RS.28.25 PER SHARE ON WHI CH STT WAS PAID AND THE TOTAL TRANSACTION OF RS.32,21,213.10 WAS PAID THROUGH ACC OUNT PAYEE CHEQUE TO THE REGISTERED BROKER AND THE SHARES WERE DEPOSITED IN THE DEMAT A CCOUNT (D. P. STOCK HLDG CORP OF INDIA LTD.) 16. THE SALE OF M/S. NFGL SHARES TOOK PLACE THROUGH THE SAME REGISTERED STOCK BROKER OF BOMBAY STOCK EXCHANGE FROM 05.08.2013 TO 30.12.2013 FOR SALE PRICE RANGING FROM RS.820/- TO RS.921/- PER SCRIP (SEE CONTRACT N OTE PLACED FROM PAGES 7 17 OF PAPER BOOK). WE NOTE FROM PERUSAL OF PAGES 18-19 OF PAPE R BOOK, WHICH REVEALS THAT THE PAYMENT FOR PURCHASE OF SHARES WERE MADE THROUGH AX IS BANK OF ASSESSEE AND PAYMENT HAS BEEN MADE ON 14.06.2012 VIDE CHEQUE NO. 138919 FOR AN AMOUNT OF RS.32,21,213.10 TO THE RECOGNIZED STOCK BROKER OF BOMBAY STOCK EXCH ANGE M. PRASAD & CO. WE ALSO NOTE FROM PERUSAL OF PAGES 20-23 OF PAPER BOOK WHICH IS THE EXTRACT OF PASS BOOK OF ASSESSEE IN PUNJAB NATIONAL BANK WHEREIN WE NOTE THAT ASSESS EE HAD RECEIVED SALE CONSIDERATION THROUGH BANK TRANSACTION AND WE VERIFIED THE CONTRA CT NOTE OF SALE PLACED AT PAGES 7 TO 17 AND TALLIED THE ENTRIES OF SALE CONSIDERATION RECEI VED BY THE ASSESSEE IN HER BANK ACCOUNT AND FIND IT TO BE CORRECT. WE ON PERUSAL OF PAGE 2 4, WHICH IS THE TRANSACTION CUM HOLDING STATEMENT OF STOCK HOLDING CORPORATION OF INDIA LTD . FIND THAT THE SHARE OF M/S. NFGL WAS HELD IN DE-MAT ACCOUNT. WE NOTE FROM A PERUSAL OF PAGE 26, WHICH IS THE TRANSACTION STATEMENT OF DEMAT ACCOUNT SHOWS THAT M/S. NFGLS S HARES OF RS.25,000/- BY INTER DEPOSITING TRANSFER ON 15.06.2012. A PERUSAL OF PA GE 30 OF PAPER BOOK, WHICH IS THE TRANSACTIONAL STATEMENT OF DEMAT ACCOUNT CORROBORAT E THE SALE OF SCRIPS OF M/S. NFGL (FROM 07.08.2013 30.10.2013). A PERUSAL OF PAGES 34-36 OF PAPER BOOK, WHICH IS THE LEDGER OF ASSESSEE IN THE BOOKS OF SHARE BROKER (01 .04.2014 TO 31.03.2014) CORROBORATES THE SALE TRANSACTION OF SCRIPS OF M/S. NFGL. 17. THE ASSESSEE HAD SOLD THE SHARES ON 05.08.2013 5000 SHARES AT THE VALUE OF RS.820/- PER SHARE AND PAID STT AND RECEIVED A CONSIDERATION OF RS.40,82,079/- WHICH THE ASSESSEE RECEIVED BY ACCOUNT PAYEE CHEQUE WHICH IS REFLECTED IN PAGE 21 OF THE PAPER BOOK RECEIVED ON 24.08.2013. LIKE WISE, THE OTHER SALE TRANSACTIONS ARE REFLECTED FROM PAGES 8 TO 17 OF THE PAPER BOOK FOR DIFFERENT RATES FROM RS. 845/- PER SHARE, RS.865/- PER SHARE, RS.920/- PER SHARE, RS.921/- PER SHARE ETC. AND THE ASSESSEE HAS RECEIVED THE SAID CONSIDERATION THROUGH ACCOUNT PAYEE CHEQUE. IT WAS POINTED OUT BY THE LD. AR THAT WHEN A SHOW CAUSE NOTICE WAS GIVEN BY THE AO ON 09.12.2 016 WHEREIN THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE SALE CONSIDERATION OF RS.2,16,49 ,202/- SHALL NOT BE ADDED BACK U/S. 68 OF THE ACT AS WELL AS RS.10,82,460/- BEING 5% OF TH E SAID SUM BE ADDED U/S. 69C OF THE ACT, THE ASSESSEE PROMPTLY REPLIED TO IT. THE AO A CKNOWLEDGES THAT THE ASSESSEE HAD REPLIED VIDE LETTER DATED 22.12.2016 WHICH THE AO H AS STATED TO HAVE BEEN PLACED ON RECORD. HOWEVER, IT WAS BROUGHT TO OUR NOTICE THAT THE AO HAS NOT MADE ANY ADVERSE FINDING IN RESPECT TO THE SUBMISSIONS MADE BY THE A SSESSEE IN JUSTIFYING THE LTCG CLAIM. IT WAS BROUGHT TO OUR NOTICE THAT NO ATTEMPT HAS BE EN MADE BY THE AO TO ISSUE SUMMONS U/S. 131 OR 133(6) OF THE ACT TO ANY OF THE PARTIES INVOLVED IN ALL THESE TRANSACTIONS TO RECORD ANY ADVERSE INFERENCE AGAINST THE ASSESSEE, AND WITHOUT DOING SO, THE AO HAS SIMPLY CONCLUDED ON THE BASIS OF THE PRESUMPTION A ND ASSUMPTION AND CIRCUMSTANTIAL EVIDENCE AND ON PREPONDERANCE OF PROBABILITIES HAS DEBUNKED THE ENTIRE EVIDENCE ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 24 SUBMITTED BEFORE THE AO TO SADDLE THE ENTIRE SALE C ONSIDERATION AND TO ALLEGE COMMISSION GIVEN @ 5% WHICH COMES TO RS.10,82,460/- AGAINST TH E ASSESSEE THUS WE NOTE THAT THE ASSESSEE HAD FURNISHED ALL PRIMARY EVIDENCES IN THE FORM OF BILLS, CONTRACT NOTES, DE MAT STATEMENTS AND BANK ACCOUNTS TO PROVE THE GENUINENE SS OF THE TRANSACTION RELATING TO PURCHASE AND SALE OF SHARES RESULTING IN LTCG. BY ADDUCING THESE EVIDENCES, THE ASSESSEE HAD DISCHARGED THE ONUS ON HER TO PROVE TH E GENUINENESS OF THE TRANSACTION WHICH YIELDED HER LTCG. ONCE THE ASSESSEE HAD DISC HARGED HER ONUS, THEN THE ONUS SHIFTED TO THE SHOULDERS OF AO THEN THE AO HAS TO E XAMINE THE VERACITY OF THE DOCUMENTS PRODUCED BY THE ASSESSEE AND IF IT IS FOUND TO BE C ORRECT AND VALID THEN IN ALL FAIRNESS THE AO SHOULD ACCEPT THE CLAIM OF LTCG. IN CASE IF THE AO ON VERIFICATION FINDS THAT THE DOCUMENTS PRODUCED BY THE ASSESSEE IS FALSE OR FABR ICATED, THEN THE AO SHOULD BRING HIS ADVERSE FINDINGS TO THE NOTICE OF THE ASSESSEE AND CONFRONT HER WITH THE ADVERSE MATERIAL/FINDINGS. THEN AGAIN THE ONUS WILL SHIFT TO THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION. HERE, IN THE PRESENT CASE IS CO NCERNED, THE AO AFTER GOING THROUGH THE DOCUMENTS, FAILED TO RETURN A FINDING THAT DOCUMENT S PRODUCED BY ASSESSEE TO SUBSTANTIATE THE YIELD OF LTCG WAS FALSE OR FABRICATED. THE FACT S OF THE CASE AS DISCUSSED, AND THE EVIDENCE ADDUCED BY THE ASSESSEE, SUPPORT THAT THE TRANSACTION MADE BY THE ASSESSEE THROUGH REGISTERED STOCK BROKER THROUGH BOMBAY STOC K EXCHANGE, AFTER REMITTING STT AND ALL PAYMENTS WERE TRANSACTED THROUGH BANK AND T HE SHARES WERE HELD IN DE MAT ACCOUNT, HAS TO BE ACCEPTED IN THE ABSENCE OF ANY O THER MATERIAL TO SUGGEST AN ADVERSE VIEW. THE AO/LD. CIT(A) ERRED IN REJECTING LEGALL Y ADMISSIBLE EVIDENCE AND WRONGLY TOOK ADVERSE VIEW AGAINST THE CLAIM OF ASSESSEE BAS ED ON SURMISES, SUSPICION AND CONJECTURE. THIS ACTION OF AO/LD. CIT(A) IS AKIN TO CONVERT PROOF INTO NO PROOF. WE NOTE THAT AO WHILE DESCRIBING THE MODUS OPERANDI AD OPTED BY UNSCRUPULOUS ELEMENTS IN THE FINANCIAL MARKETS HAS MADE A VAGUE STATEMENT TH AT SOME ACCOMMODATION ENTRY PROVIDER HAS ADMITTED THAT M/S. NFGL ALSO INDULGED IN WRONG PRACTICES, HOWEVER, WE SOUGHT THE LD. DRS HELP TO THROW SOME LIGHT ON TH IS SPECIFIC ALLEGATION MADE BY THE AO. HOWEVER, OTHER THAN THE BALD STATEMENT, NOTHING ADV ERSE COULD BE FOUND AGAINST THE SHARES OF M/S. NFGL. EVEN IF FOR ARGUMENT SAKE IF THERE WAS SUCH AN ADVERSE ADMISSION MADE BY AN ACCOMMODATION PROVIDER AGAINST M/S. NFGL , THEN THE AO IN ALL FAIRNESS HAD TO CONFRONT THE ASSESSEE WITH THE ADVERSE MATERIAL AND GIVEN AN OPPORTUNITY TO THE ASSESSEE TO MEET IT AND THE ASSESSEE SHOULD HAVE BE EN GIVEN AN OPPORTUNITY TO EXPLAIN IT; AND IN CASE THE ASSESSEE DESIRES, SHE SHOULD HAVE B EEN ALLOWED TO CROSS EXAMINE THE ACCOMMODATION PROVIDER OR ELSE THE ADVERSE MATERIAL CANNOT BE ACTED UPON TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE AS HELD BY THE HONBLE APEX COURT IN ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCI SE 62 TAXMAN.COM 3. IT SHOULD BE KEPT IN MIND THAT ASSESSEE CANNOT BE KEPT IN DARK A S TO THE MATERIAL AGAINST HER AND IT HAS TO BE GIVEN TO THE ASSESSEE IF AO PROPOSES TO USE I T AGAINST THE ASSESSEE AND THESE ARE THE BASIC NATURAL JUSTICE PRINCIPLES THE AO HAS TO KEEP IN MIND WHILE FRAMING AN ASSESSMENT. THOUGH AO/LD. CIT(A) HAVE BEEN SWAYED BY THE REPOR T OF SEBI/INVESTIGATION WING OF THE DEPARTMENT, BOTH THE AUTHORITIES COULD NOT POIN T OUT WHAT WAS THE ROLE OF THE ASSESSEE IN ANY WRONG DOING WHICH IS PROHIBITED BY LAW. W E NOTE THAT NEITHER THE PURPORTED ADVERSE REPORTS RELIED ON BY THE AO HAS BEEN BROUGH T ON RECORD NOR IS THERE ANY REFERENCE TO ANY FINDING OF SUCH REPORT WHICH DIREC TLY ACCUSES THE ASSESSEE IN ANY WRONGFUL ACTIONS. THE AO HAS MERELY CARVED OUT CERT AIN FEATURES/MODUS-OPERANDI OF COMPANIES INDULGING IN PRACTICES NOT SANCTIONED BY LAW AND AS MENTIONED IN SUCH REPORT. WE NOTE THAT NEITHER ANY INVESTIGATION WERE CARRIED OUT AGAINST THE ASSESSEE, NOR AGAINST THE BROKERS TO WHOM THE ASSESSEE DEALT WITH OR THE COMPANIES IN WHICH THE ASSESSEE DEALT WITH THE PURCHASE AND SALE OF SHARES IN QUESTION WE RE DONE BY THE AO. THE TRANSACTION IN QUESTION AND THE FACT THAT THE SHARES IN QUESTION W ERE QUOTED AND TRANSACTION HAPPENED ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 25 ON THE FLOOR OF THE STOCK EXCHANGE IN PUBLIC VIEW W HICH ACTION HAS NOT BEEN INTERDICTED BY THE SECURITIES WATCHDOG SEBI. IN SUCH A SCENARIO, TO PAINT THE ENTIRE SHARE TRANSACTION OF M/S. NFGL WHICH YIELDED HIGH CAPITAL GAIN AS BOGUS IS NOT CORRECT WITHOUT MATERIALS TO SUPPORT SUCH AN ADVERSE FINDING. WE NOTE IN THE LIG HT OF THE AFORESAID RELEVANT EVIDENCES, THE ACTION OF THE AO AND CIT(A) WAS NOT JUSTIFIED I N REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS OF THEORY OF SURROUNDING CIRCUMSTANCES AN D HUMAN CONDUCT AND PREPONDERANCE OF PROBABILITY AGAINST THE ASSESSEE. FOR THAT WE RE LY ON THE DECISION OF THE SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF GTC INDUSTRIES LT D. VS ACIT (SUPRA) FOR THIS PROPOSITION. THE VARIOUS FACETS OF THE CONTENTION O F THE LD. AR(SUPRA), TO ROPE IN THE ASSESSEE AND FOR DRAWING ADVERSE INFERENCES, WHICH REMAIN UNPROVED BASED ON THE EVIDENCE AVAILABLE ON RECORD ARE NOT REITERATED FOR THE SAKE OF BREVITY. 18. AT THE COST OF REPETITIONS, WE FIND THAT T HE TRANSACTIONS OF THE SALE OF SHARES BY THE ASSESSEE WAS DULY SUPPORTED BY RELEVANT EVIDENCES I NCLUDING CONTRACT NOTES, DEMAT STATEMENT, BANK ACCOUNT REFLECTING THE TRANSACTIONS , STOCK BROKERS HAVE CONFIRMED THE TRANSACTIONS, THE STOCK EXCHANGE HAVE CONFIRMED THE TRANSACTIONS, THE SHARES HAVE BEEN SOLD ON THE ONLINE PLATFORM OF THE STOCK EXCHANGE A ND EACH TRADE OF SALE OF SHARES WERE HAVING UNIQUE TRADE NUMBER AND TRADE TIME. IT IS NO T THE CASE OF THE AO THAT THE SHARES WHICH WERE SOLD ON THE DATE MENTIONED IN THE CONTRA CT NOTE WERE NOT THE TRADED PRICE ON THAT PARTICULAR DATE. THE AO DOUBTED THE TRANSACTIO NS DUE TO THE HIGH RISE IN THE STOCK PRICE AND FOR THAT THE ASSESSEE CANNOT BE BLAMED UN LESS THERE WAS ANY MATERIAL/ EVIDENCE TO PROVE THAT THE ASSESSEE OR ANY ONE ON HIS BEHALF HAS RIGGED OR MANIPULATED THE STOCK PRICE. IT SHOULD BE NOTED THAT THE STOCK EXCHANGE O F SEBI ARE THE STATUTORY AUTHORITY APPOINTED BY THE GOVERNMENT OF INDIA TO ENSURE THAT THERE IS NO STOCK RIGGING OR MANIPULATION. THE AO HAS NOT BROUGHT ANY EVIDENCE O N RECORD TO SHOW THAT THESE AGENCIES HAVE ALLEGED ANY STOCK MANIPULATION AGAINST THE ASS ESSEE OR THE BROKERS OR THE COMPANIES IN QUESTION. IN ABSENCE OF ANY RELEVANT EVIDENCES I T CANNOT BE SAID THAT MERELY BECAUSE THE STOCK PRICE MOVED SHARPLY, THE ASSESSEE WAS TO BE B LAMED FOR BOGUS TRANSACTIONS. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS PURCHASED T HE STOCKS THROUGH REGISTERED BROKERS AND THEREAFTER THE ASSESSEE HAS SOLD THE SHARES TH ROUGH THE REGISTERED SHARE/STOCK BROKERS WITH CALCUTTA STOCK EXCHANGE, AND BOTH HAVE CONFIR MED THE TRANSACTIONS AND HAVE ISSUED VALID CONTRACT NOTES AS PER LAW; AND THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL CIT VS RUNGTA PROPERTIES IN ITA NO.105 OF 2016 DATED 08 MAY, 2017 WHEREIN IT WAS HELD THAT ON THE LAST POINT, THE TRIBUNAL HELD THAT THE AO HAD NOT BROUGHT RELEVANT MATERIAL TO SHOW THAT THE TRANSACTIONS IN SHARES OF THE COMPANY INVOLVED WERE FALSE OR FICTITIOUS. IT IS THE FINDING OF THE AO THAT THE SC RIPTS OF THIS COMPANY WAS EXECUTED BY A BROKER AND THE BROKER WAS SUSPENDED FOR SOME TIME. IT IS THE ASSESSEES CONTENTION THAT EVEN THOUGH THERE ARE ALLEGATIONS AGAINST THE BROKE R, AND FOR THAT REASON THE ASSESSEE CANNOT BE HELD LIABLE ON THIS POINT, THE TRIBUNAL H ELD THAT AS A MATTER OF FACT THE AO DOUBTED THE INTEGRITY O F THE BROKER AND THE BROKER FIRM AND ALSO AO OBSERVED THAT THE ASSESSEE HAD NOT FURNISHED ANY EX PLANATION IN RESPECT OF ANY DISCUSSION OF TRADING O F SHARES. THE AO RELIED THE LOSS OF RS.25,30,396/- ON LY ON THE BASIS OF INFORMATION SUBMITTED BY STOCK A S FICTITIOUS. THE AO HAS ALSO NOT DOUBTED THE GENUINE NESS OF THE DOCUMENTS PLACED BY THE ASSESSEE ON RECORD. THE AOS OBSERVATION AND CONCLUSION ARE MER ELY BASED ON INFORMATION. THEREFORE ON SUCH BASIS, NO DISALLOWANCE CAN BE MADE AND ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CT(A), WHO HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. THIS GROUND NO.1 OF THE REVENUE IS DISMISSED. WE AGREE WITH THE REASONING OF THE TRIBUNAL ON THIS POINT ALSO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE SU GGESTED QUESTION, IN OUR OPINION DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 26 19. IN THE LIGHT OF THE DOCUMENTS FURNISHED I.E. (I TO V & I TO III) IN PARA 3(SUPRA) WE FIND THAT THERE IS ABSOLUTELY NO ADVERSE MATERIAL TO IMP LICATE THE ASSESSEE TO HAVE ENTERED INTO ANY ILLEGAL ACTIONS/ MODUS-OPERAND PROHIBITED BY LAW AS ALLEGED BY THE AO AGAINST THE ASSESSEE, WHICH IN OUR CONSIDERED OPINION HAS N O LEGS TO STAND AND THEREFORE HAS TO FALL. WE TAKE NOTE THAT THE LD. DR COULD NOT CONTRO VERT THE FACTS SUPPORTED WITH MATERIAL EVIDENCES WHICH ARE ON RECORD AND COULD ONLY RELY O N THE ORDERS OF THE AO/CIT(A). WE NOTE THAT IN THE ABSENCE OF MATERIAL/EVIDENCE THE A LLEGATIONS THAT THE ASSESSEE/BROKERS GOT INVOLVED IN PRICE RIGGING/MANIPULATION OF SHARE S MUST THEREFORE ALSO FAIL. AT THE COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAD FURNIS HED ALL RELEVANT EVIDENCE IN THE FORM OF BILLS, CONTRACT NOTES, DEMAT STATEMENT AND BANK ACC OUNT TO PROVE THE GENUINENESS OF THE TRANSACTIONS RELEVANT TO THE PURCHASE AND SALE OF S HARES RESULTING IN LONG TERM CAPITAL GAIN. THESE EVIDENCES WERE NEITHER FOUND BY THE AO NOR BY THE LD. CIT(A) TO BE FALSE OR FICTITIOUS OR BOGUS. THE FACTS OF THE CASE AND THE EVIDENCE IN SUPPORT OF THE EVIDENCE CLEARLY SUPPORT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF THE ASSESSEE WERE GENUINE AND THE AUTHORITIES BELOW WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE THAT INCOME FROM LTCG IS EXEMPTED U/S 10(38) OF THE ACT. FOR COMING TO SUCH A CONCLUSION WE RELY ON THE DECISION OF THE HONBLE C ALCUTTA HIGH COURT IN THE CASE OF M/S. ALIPINE INVESTMENTS IN ITA NO.620 OF 2008 DAT ED 26 TH AUGUST, 2008 WHEREIN THE HIGH COURT HELD AS FOLLOWS : IT APPEARS THAT THERE WAS LOSS AND THE WHOLE TRANS ACTIONS WERE SUPPORTED BY THE CONTRACT NOTES, BILLS AND WERE CARRIED OUT THROUGH RECOGNIZED STOCK BROKER OF THE CALCUTTA STOCK EXCHANGE AND ALL THE BILLS WERE RECE IVED FROM THE SHARE BROKER THROUGH ACCOUNT PAYEE WHICH ARE ALSO FILED IN ACCOR DANCE WITH THE ASSESSMENT. IT APPEARS FROM THE FACTS AND MATERIALS PLACED B EFORE THE TRIBUNAL AND AFTER EXAMINING THE SAME, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE. IN DOING SO THE TRIBUNAL HELD THAT THE TRANSACTIO NS CANNOT BE BRUSHED ASIDE ON SUSPICION AND SURMISES. HOWEVER IT WAS HELD THAT TH E TRANSACTIONS OF THE SHARES ARE GENUINE. THEREFORE WE DO NOT FIND THAT THERE IS ANY REASON TO HOLD THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW HELD IN THIS MATTER. HE NCE THE APPEAL BEING ITA NO.620 OF 2008 IS DISMISSED. 20. WE NOTE THAT THE LD. AR CITED PLETHORA OF THE C ASE LAWS TO BOLSTER HIS CLAIM WHICH ARE NOT BEING REPEATED AGAIN SINCE IT HAS ALR EADY BEEN INCORPORATED IN THE SUBMISSIONS OF THE LD. AR (SUPRA) AND HAVE BEEN DUL Y CONSIDERED BY US TO ARRIVE AT OUR CONCLUSION. THE LD. DR COULD NOT BRING TO OUR NOTIC E ANY CASE LAWS TO SUPPORT THE IMPUGNED DECISION OF THE LD. CIT(A)/AO. IN THE AFOR ESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF SALE PROCEEDS OF THE SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WE NOTE THAT THOUGH THE DEPARTMENT WAS AWARE THAT THE ASSES SEE HAD PURCHASED THE 25000 SHARES OF M/S. NFGL IN AY 2013-14, FOR RS.32,21,269 /- HAS NOT REDUCED THE SAME FROM THE TOTAL SALE CONSIDERATION OF RS.2.16 CR. IT IS ELEMENTARY THAT INCOME CAN BE COMPUTED ONLY AFTER DEFRAYING THE COST. SO THE ACTION OF AO TO ADD THE ENTIRE SALE CONSIDERATION OF RS.2.16 CR. ITSELF IS ARBITRARY EXERCISE OF POWER A ND CANNOT BE SUSTAINED. THEREFORE, THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF ENTIRE SALE CONSIDERATION OF M/S. NFGL IS PERVERSE AND IS DIRECTED TO BE DELETED. CO NSEQUENTLY, THE ADDITION OF 5% AS COMMISSION TO THE TUNE OF RS.10,82,460/- CANNOT BE ALSO SUSTAINED AND ORDERED TO BE DELETED. THE ASSESSEES APPEAL SUCCEEDS. ITA NO.1839/KOL/2017 A .Y 2014-15 SH. UDIT AGARWAL VS. DCIT(IT)-2(1 ), KOL. PAGE 27 5.1. SIMILARLY THE LD DR COULD NOT CONTROVERT THE S IMILAR FINDINGS RECORDED BY THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF SHREYANS CHOPRA VS ACIT IN ITA NO. 661/KOL/2018 DATED 25.7.2018 FOR ASST YEAR 2014-15 IN RESPECT OF SHARES OF S R K INDUSTRIES LTD. 5.2. WE HOLD THAT THE REVENUE FAILS TO INDICATE AN Y SPECIFIC EVIDENCE AGAINST THE ASSESSEE IN ABOVE TERMS QUA THE LTCG DERIVED FROM T RANSFER OF SHARES IN THE AFORESAID TWO COMPANIES. WE THEREFORE ADOPT THE ABO VE EXTRACTED REASONING MUTATIS MUTANDIS TO DELETE THE IMPUGNED BOGUS LTCG ADDITION OF RS 9 6,17,065/- . CONSEQUENTLY THE ADDITION MADE TOWARDS UNEXPLAINE D EXPENDITURE ON ACCOUNT OF COMMISSION OF RS 48,085/- ALSO STANDS AUTOMATICALLY DELETED. 4. WE ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTANDIS TO DELETE THE IMPUGNED SEC. 68 ADDITION OF BOGUS LTCG. 5. THIS ASSESSEES APPEAL IS ALLOWED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT 26/ 12/2018 SD/- SD/- ( %) (' %) (M.BALAGANESH) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 26 / 12 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SHRI UDIT AGARWAL, 3 MADAN MOHAN BURMAN STREET, KOLKATA-007 2. /RESPONDENT-DCIT(IT), 2(1), 110, SHANTI PALLY,KOLKA TA-107 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 3,